Metro. Life Ins. Co. v. Taylor - 481 U.S. 58, 107 S. Ct. 1542 (1987)

Rule:

One corollary of the well-pleaded complaint rule developed in the case law is that Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.

Facts:

Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (ERISA) provides that a participant or beneficiary may bring a civil action to, inter alia, recover benefits due him under the terms of an employee benefit plan. Under 28 U. S. C. § 1441(a), any civil action brought in state court of which the federal district courts have original jurisdiction may be removed by the defendant to the appropriate federal district court. An employer set up an employee benefit plan subject to the provisions of the ERISA for its salaried employees. A salaried employee was involved in a job-related accident, sustained a back injury, and filed a worker's compensation claim. Subsequent to returning to his job, the employee took a leave of absence from work due to severe emotional problems, and the insurer which underwrote the employee benefit plan began paying disability benefits to the employee under the plan. At the insurer's request, the employee submitted to an examination by a psychiatrist. The psychiatrist determined that the employee was emotionally unable to work. After a followup examination a few weeks later, however, the psychiatrist determined that the employee was fit for work, and the insurer terminated the employee's benefit payments. The employee filed a supplemental claim for benefits alleging that his work-related back injury disabled him from working. At the insurer's request, the employee was examined by an orthopedist. No orthopedic problems were found, and the insurer denied the supplemental disability claim. Upon submitting to a physician's examination at the employer's medical department, the employee was found to be not disabled. The employee refused to return to work, and his employment was terminated. The employee filed suit against the employer and the insurer in a Michigan state court, the Wayne County Circuit Court, alleging various state law causes of action, including a claim for disability benefits. The employer and the insurer removed the suit to the United States District Court for the Eastern District of Michigan alleging federal question jurisdiction over the disability benefits claim by virtue of ERISA and pendent jurisdiction over the remaining claims. The District Court found the case properly removable and granted the employer and the insurer summary judgment on the merits (588 F Supp 562). The United States Court of Appeals for the Sixth Circuit reversed on the ground that the District Court lacked removal jurisdiction. The Court of Appeals (1) found that the employee's complaint stated only state law causes of action subject to the federal defense of ERISA pre-emption and that the "well-pleaded complaint" rule precluded removal on the basis of a federal defense, and (2) held that the doctrine permitting the removal of cases purporting to state only state-law claims in labor cases pre-empted by 301 of the Labor Management Relations Act (29 USCS 185) did not apply to this case (763 F2d 216).

Issue:

Did ERISA pre-empt the state common-law cause of action asserting claims under the insured employee benefit plan?

Answer:

Yes

Conclusion:

The court held (1) that ERISA pre-empted the state common-law cause of action asserting claims under the insured employee benefit plan because the action related to an employee benefit plan under 514(a) of ERISA (29 USCS 1144(a)), and was based upon common law of general application that was not a law regulating insurance, and thus was not saved from pre-emption by 514(b)(2)(A) of ERISA (29 USCS 1144(b)(2)(A)). The court also held that the present action, although purporting to raise only state-law claims, was necessarily federal in character for purposes of the well-pleaded complaint rule--under which a cause of action is treated as arising under federal law when the plaintiff's well-pleaded complaint raises issues of federal law--and therefore arose under the laws of the United States, so as to fall within a federal court's jurisdiction under 28 USCS 1331, and was removable to federal court under 28 USCS 1441(b), because Congress has clearly manifested an intent that, once pre-empted by ERISA (29 USCS 1144(a)) and displaced by that Act's civil enforcement provision (29 USCS 1132(a)(1)(B)), such causes of action are removable to federal court as are actions under 301 of the Labor Management Relations Act (29 USCS 185). Finally, the court found that it does not matter that, at the time the suit was filed, it was not obvious that the common-law action was pre-empted and displaced by ERISA, the intent of Congress, not the obviousness of the pre-emption defense, controlling the determination of a federal court's removal jurisdiction.