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Isham v. The Boeing Co.

United States District Court, Tenth Circuit

May 22, 2013

BRAD ISHAM, Plaintiff,
v.
THE BOEING COMPANY, Defendant.

MEMORANDUM AND ORDER

Richard D. Rogers, United States District Judge.

This case was originally filed in state court and has been removed to this court. Plaintiff brings three state common law claims for: negligent misrepresentation, fraud through silence and fraud. This action is now before the court upon defendant’s motion to dismiss for failure to state a claim. Defendant contends that this case should be dismissed because plaintiff’s state law claims are preempted under the federal ERISA statute. This raises an often difficult issue.[1] It is perhaps more difficult here because plaintiff asserts in response to the motion to dismiss that he is not making a claim for lost ERISA plan benefits. Plaintiff claims that he is seeking to recover for the economic loss he sustained by electing to retire when he was misled by defendant into doing so. Doc. No. 17, p. 5. This assertion is neither confirmed nor contradicted by the allegations in the complaint which generally ask for actual and compensatory damages, but do not specifically describe the losses for which plaintiff seeks damages. For the reasons discussed below, the court is not convinced at this stage that the objectives of ERISA would be compromised by permitting this case to go forward upon plaintiff’s state law claims. Therefore, the court shall deny defendant’s motion to dismiss.

Defendant also alleges that plaintiff has not pleaded his fraud claims with sufficient specificity to conform with FED.R.CIV.P. 9(b). But, plaintiff has filed a motion for leave to file an amended complaint which elaborates upon his fraud allegations. Defendant does not oppose the motion to amend on any grounds other than the preemption arguments which defendant asserts make plaintiff’s attempt to amend futile. Because the court rejects defendant’s preemption arguments, the court shall permit this case to go forward upon the amended complaint.

I. 12(b)(6) standards

In ruling upon a motion to dismiss brought pursuant to FED.R.CIV.P. 12(b)(6), the court assumes as true all well-pleaded factual allegations in the complaint and determines whether they plausibly give rise to an entitlement of relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

II. Plaintiff’s allegations

The following recitation of plaintiff’s allegations is taken from Exhibit A to Doc. No. 18 which is plaintiff’s proposed first amended complaint. Plaintiff alleges that he was a long-term managerial employee of defendant who was forced to take a leave of absence from his employment, with defendant Boeing’s approval, after incurring physical and mental impairments. Plaintiff further alleges that he requested and received from defendant certain information as to the benefits he would enjoy as an existing employee and as a Boeing retiree. According to plaintiff, he was told by defendant that he would retain his Boeing life insurance benefit should he elect to retire in lieu of attaining Boeing long-term disability benefits. Plaintiff asserts that he was never told by defendant that he would be required to attain active-duty employment status after returning from his leave of absence in order to be considered eligible for his full benefit package, including the company life insurance policy; nor was he told that his prior, involuntary cessation of long-term disability benefits would work a forfeiture of those benefits. Plaintiff asserts that he relied upon defendant’s advice and failure to warn when he retired without returning to active-duty status. Thereafter, according to the complaint, plaintiff was informed that his entire Boeing retirement entitlements were in full force and effect. This continued for three years until February 2011 when plaintiff was notified by defendant for the first time that his entitlement to a premium-free Boeing life insurance policy with a face value of $223, 000 was no longer valid. Defendant is alleged to have told plaintiff that plaintiff was not entitled to the life insurance policy because plaintiff had not returned to an active-duty status before notifying Boeing of his decision to retire and that his prior, involuntary cessation of long-term disability benefits would cause a forfeiture of the benefits.

Plaintiff asserts that he would not have retired if he had known what Boeing now contends were his actual rights as an employee. Plaintiff generally prays for actual and compensatory damages to compensate him for losses sustained as a result of defendant’s alleged negligence and fraud. Plaintiff alleges that his “damages were suffered in connection with a transaction that defendant intended to influence, to wit plaintiff’s decision as to whether to retire from Boeing.” Doc. No. 18-1, ¶¶ 26, 36.

III. The court is not convinced that plaintiff’s alleged state law claims seek relief which is contrary to the objectives of ERISA and warrants preemption.

Defendant contends that plaintiff’s claims are “fundamentally claims for the recovery of benefits under an ERISA employee benefit plan” and that they are preempted under 29 U.S.C. § 1144(a) because they “relate to” an ERISA-regulated employee benefit plan. Doc. No. 13, p.6. Section 1144(a) provides that ERISA “shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan. . . .”

Plaintiff denies that he is seeking the recovery or reinstatement of any ERISA-regulated benefit of employment. Plaintiff states that he “intends to seek the accrued worth of his financial losses arising from his wrongfully-induced retirement from Boeing in 2007.” Doc. No. 17, p. 3. Plaintiff specifically denies that he seeks the worth or value of any life insurance policy guaranteed to Boeing employees.[2]

A. Preemption factors

To repeat, § 1144(a) states that ERISA “shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan. . . .” Whether the state common-law rules governing misrepresentation and fraud “relate to” an ERISA plan, requires the court to consider the objectives of ERISA as well as the nature of the effect of the state laws on ERISA plans, since the state common-law rules governing misrepresentation and fraud do not expressly refer to employee benefit plans. See Egelhoff v. Egelhoff, 532 U.S. 141, 147 (2001); New York State Conf. of Blue Cross and Blue Shield Plansv. Travelers Ins. Co., 514 U.S. 645, 656 (1995). This represents a shift in analysis of preemption issues as recognized by the Tenth Circuit in Carroll v. Los AlamosNational Security, LLC, 407 Fed.Appx. 348 (10th Cir. 1/19/2011). There, the court stated that the “Supreme Court has go[ne] beyond the unhelpful text and the frustrating difficulty of defining [‘relate to’] ...


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