DTE Energy Technologies, Inc. v. Briggs Electric, Inc.

United States District Court for the Eastern District of Michigan · 2010 · Contracts

ContractsERISA preemptionRemoval jurisdictionERISAcomplete preemption§ 502§ 514removal

Facts

Leslie Moon, a BWX employee, selected benefits including $200,000 in life insurance through BWX's FlexChoice program during the 2005 open enrollment period. After he was approved for long-term disability, the plan documents provided that he became ineligible for group life insurance unless he converted coverage with MetLife within thirty-one days and paid premiums directly to MetLife, but he did not do so and instead continued paying premiums to BWX. He later received a 2006 confirmation statement again listing $200,000 in life insurance and showing part of the annual benefits cost allocated to life insurance. After Leslie Moon died, BWX accepted premium payments but refused to pay the life insurance benefit, and plaintiff framed her suit as based on an independent benefits agreement rather than the group life plan.

Issue

Whether plaintiff's state-law claims were completely preempted by ERISA and therefore removable, even though plaintiff styled the suit as one based on an independent contract reflected in the 2006 confirmation statement rather than on the acknowledged group life ERISA plan. Also, whether the alleged benefits agreement itself constituted an ERISA plan.

Rule

ERISA complete preemption under § 502 supports removal only when the claim is, in substance, one to vindicate rights arising from an ERISA plan. In determining whether an alleged separate arrangement is itself an ERISA plan, a court should first ask whether it requires an ongoing administrative scheme under Fort Halifax, and then consider whether a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits under Donovan. Even if the alleged separate arrangement is not itself an ERISA plan, federal jurisdiction is proper when the substance of the complaint seeks benefits of a type and amount provided by an acknowledged ERISA plan and merely uses artful pleading to avoid ERISA.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Columbus, Ohio, Nora Patel worked for Lakefront Alloy Systems and had previously enrolled in the company's ERISA-governed accidental death plan. After her eligibility allegedly lapsed, the company sent her a benefits summary listing the same $150,000 accidental death coverage and continued accepting payroll deductions. When Nora died, her estate sued in Ohio state court for breach of an independent contract based solely on that summary.

Is removal to federal court most likely proper?

Explanation. Removal is most likely proper. The majority held that complete preemption under ERISA § 502 turns on the substance of the claim, not the label attached to it. A plaintiff cannot avoid federal jurisdiction through artful pleading when the complaint, in reality, seeks the same type and amount of benefits available under an acknowledged ERISA plan. By contrast, the mere fact that a state-law claim mentions employee benefits is not enough, because § 514 conflict preemption does not itself create removal jurisdiction. And arguments that a benefits summary can never be relevant, or that calling the suit a breach-of-contract action defeats complete preemption, contradict the court’s substance-over-form approach.