                                                                                                                           Opinions of the United
2000 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-28-2000

Wood v Prudential Ins Co
Precedential or Non-Precedential:

Docket 99-5022




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Recommended Citation
"Wood v Prudential Ins Co" (2000). 2000 Decisions. Paper 69.
http://digitalcommons.law.villanova.edu/thirdcircuit_2000/69


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Filed March 28, 2000

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 99-5022

JAMES W. WOOD

v.

PRUDENTIAL INSURANCE COMPANY OF AMERICA

(D.C. Civil No. 98-cv-02383)

JAMES W. WOOD; KAREN WOOD, individually and as
Guardians of MATTHEW WOOD, incompetent

v.

PRUDENTIAL INSURANCE COMPANY OF AMERICA

(D.C. Civil No. 98-cv-02487)

James Wood; Karen Wood, individually and as guardians
of Matthew Wood, incompetent

       Appellants

On appeal from Orders entered in the
United States District Court
for the District of New Jersey
(D.C. Civil Action Nos. 98-2383 and
98-2487) (Consolidated Cases)
Chief District Judge: Honorable Anne E. Thompson

Argued: November 16, 1999




Before: ALITO AND STAPLETON, Circuit Judges, and
FEIKENS, District Judge.

(Filed: March 28, 2000)

       G. Martin Meyers (argued)
       Law Offices of G. Martin Meyers,
       P.C.
       35 West Main Street
       Suite 106
       Denville, New Jersey 07834
       Attorney for Appellants
       Don A. Innamorato
       Stephanie Wilson
       Reed Smith Shaw & McClay LLP
       136 Main Street, Suite 250
       Princeton, New Jersey 08543-7839
        and
       David Bennet Ross
       Peter A. Walker (argued)
       Mara-Louise Anzalone
       Seyfarth, Shaw, Fairweather &
       Geraldson
       1270 Avenue of the Americas
       Suite 2500
       New York, New York 10020-1801
       Attorneys for Appellee

OPINION OF THE COURT

FEIKENS, District Judge:

I. Background

In 1998, Appellant James Wood ("Wood") filed suit in a
New Jersey state court against his former employer, The
Prudential Insurance Company of America ("Prudential"). In
his complaint, Wood pleaded four counts against
Prudential: discrimination based on a New Jersey statute1;
_________________________________________________________________

1. New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq.

                               2


defamation; outrage; and discrimination based on the New
Jersey constitution2. Wood alleged that Prudential
discriminated against him by terminating his employment
to avoid paying benefits3 to him and his dependents. In this
state suit, Wood sought, inter alia, compensatory damages,
damages for humiliation, pain and suffering, and punitive
damages. Prudential removed the suit to the U.S. District
Court of New Jersey asserting that the Employee
Retirement Insurance Security Act of 1974 ("ERISA"), 29
U.S.C. S 1001 et seq., completely preempted both Wood's
claim of discrimination under the state statute and his
claim of discrimination under the state constitution. In
denying Wood's motion to remand the suit to state court,
the United States District Court held that ERISA completely
preempted those two claims. The court took supplemental
jurisdiction over the claims of defamation and outrage and
construed the claim of outrage as a claim of intentional
infliction of emotional distress.

Wood and his wife, Karen Wood, individually and on
behalf of their son, Matthew Wood, then filed suit later in
1998 in the U.S. District Court of New Jersey alleging that
Prudential's termination of Wood's employment violated
ERISA and, since Matthew Wood was disabled, that it
violated the Americans with Disabilities Act ("ADA"). For his
ERISA claim, Wood sought equitable relief and, for his ADA
claim, Wood sought compensatory and other damages. The
District Court dismissed the ADA claim, consolidated the
two cases, and granted Prudential's motion to submit all
claims to arbitration.

II. Issues

Several questions are presented to us on appeal:

       1) Is complete preemption of a state claim that is
       subject to Section 510 of ERISA warranted even if the
       state claim prays for relief arguably not provided for in
       Section 502(a) of ERISA?
_________________________________________________________________

2. New Jersey Constitution of 1947, Art. 1, P 1.

3. The parties define these benefits as health and retirement benefits.

                                3


       2) Assuming that complete preemption applies, may
       the District Court compel arbitration of his claims
       under the facts of this case?

       3) In order to rule on these questions, did the District
       Court, and do we, have jurisdiction?

III. Complete Preemption

A.

The District Court denied Wood's motion to remand
holding that ERISA completely preempted Wood's claim of
discrimination based on the state statute. The District
Court read that claim as an assertion "that depriving him
of his retirement benefits was the motivating purpose for,
and not merely a consequence of, his termination." We
agree with this reading.4

In his state complaint, Woods alleges generally that:

       [T]he real reason that . . . Prudential terminated [his]
       employment . . . was its knowledge that, because he
       was fifty-one years old, and had more than twenty
       years of service with Prudential, plaintiff Jim Wood was
       about to become eligible for full retirement benefits.
       Defendant Prudential knew that the vesting of those
       benefits would require it to continue to be responsible
       for the medical expenses of the plaintiff and of his
       dependents, including the plaintiff's son, Matthew
       Wood.

State Complaint P4, A-16. He repeats this general allegation
in each of his four state law claims. State Complaint PP 7,
10, 13, 16, A-19-21. Since Wood's son suffers from severe
head injuries due to a car accident, Wood alleges that the
_________________________________________________________________

4. The District Court held that ERISA also completely preempted Wood's
claim of discrimination based on the state constitution because that
claim was substantially identical to the claim of discrimination based on
the state statute. Both holdings are subject to appeal, but Wood has not
challenged the District Court's holding as to the complete preemption of
the claim of discrimination based on the state constitution. Thus, we do
not address this holding.

                               4


medical bills for his son run into the "millions of dollars."
State Complaint P 5, A-17.

Wood argues that his complaint contains claims of age
and disability discrimination entirely separate from this
benefits-defeating allegation. But, we find nothing in his
complaint other than an allegation that Prudential
terminated Wood's employment to avoid paying health and
retirement benefits.

Wood argues that his complaint alleges discrimination
based on age because it referred directly to his age. The
relevant portion of the allegation reads: "[B]ecause he was
fifty-one years old, and had more than twenty years of
service with Prudential, plaintiff Jim Wood was about to
become eligible for full retirement benefits." State
Complaint P 4, A-16. It seems obvious that Wood's
reference to age, like the accompanying reference to his
length of service, establishes the allegation that Wood was
"about to become eligible for full retirement benefits." His
age is relevant only insofar as it affected his eligibility for
benefits. We agree with the District Court when it noted:
"Aside from nearing early retirement age, there are no facts
alleged in the Complaint to support a claim that Wood's age
had any bearing on Prudential's decision to terminate him."

Wood also argues that his state court complaint alleges
discrimination based on the disability of Wood's son. His
complaint mentions the disability of his son only in the
context of Prudential's potential obligation for the high
medical expenses of his son. Since Wood's state
discrimination claim provides no rationale for Prudential's
treatment other than to avoid paying benefits to him and to
his dependents, we read the complaint as alleging that
Prudential's termination of Wood's employment had a
benefits-defeating motive.

B.

A claim of discharge based on a "benefits-defeating"
motive comes under Section 510 of ERISA. That section
prohibits the "discharge of a participant or beneficiary for
the purpose of interfering with the attainment of any right
to which such participant may become entitled."S 510, 29

                               5


U.S.C. S 1140. "Congress enacted this section to prevent
unscrupulous employers from discharging or harassing
their employees in order to prevent them from obtaining
their statutory or plan-based rights." Zipf v. American
Telephone and Telegraph Co., 799 F.2d 889, 891 (3rd Cir.
1986); see, also, Ingersoll-Rand Co. v. McClendon, 498 U.S.
133, 143 (1990).

Section 510 of ERISA does not stand alone; by its terms
it gains its enforcement vitality from Section 502. Section
510 provides: "The provisions of [section 502] of this title
shall be applicable in the enforcement of this section."
S 510, 29 U.S.C. S 1140. Thus, any state claim that falls
within Section 510 is necessarily within Section 502.

C.

Federal courts have jurisdiction over claims "arising
under the Constitution, law or treaties of the United
States." 28 U.S.C. S 1331. Under the well-pleaded
complaint rule, a court determines whether a claim"arises
under" federal law from a plaintiff's complaint. Metropolitan
Life v. Taylor, 481 U.S. 58, 62 (1987) ("It is long-settled law
that a cause of action arises under federal law only when
the plaintiff's well pleaded complaint raises issues of federal
law."). A plaintiff is, thus, considered the"master of the
complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 398-
99 (1987).

The United States Supreme Court has recognized the
doctrine of complete preemption as a corollary or an
exception to the "well-pleaded complaint" rule. Metropolitan
Life, 481 U.S. at 63-64. Under this complete preemption
exception, the Court has held 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." Id. Since ERISA Section 502(a)
completely preempts a state claim, removal of Wood's state
claim to federal jurisdiction is proper. See id. at 66
("Congress has clearly manifested an intent to make causes
of action within the scope of 502(a) removable to federal
court."); Joyce v. RJR Nabisco Holdings Corp. , 126 F.3d
166, 172 (3rd Cir. 1997).

                                6


We reject Wood's contention that, because none of the
relief he requested in his state claim is available under
Section 502, ERISA does not completely preempt his state
action. The relief Wood seeks is irrelevant to a
determination of complete preemption. Complete

preemption, like ordinary preemption, does not depend on
the type of relief requested in a complaint. Complete
preemption is an exception to the well-pleaded complaint
rule. "[T]he pre-emptive effect of S 502(a) [is] so complete
that an ERISA pre-emption defense provides a sufficient
basis for removal of a cause of action to the federal forum
notwithstanding the traditional limitations imposed by the
"well-pleaded complaint" rule." Ingersoll-Rand, 498 U.S. at
145 (citing Metropolitan Life, 481 U.S. at 64-67).

Additionally, a state law claim may fall within Section
502(a) and thus be completely preempted even if the
plaintiff asks for relief that is not available under Section
502(a). In Metropolitan Life, the plaintiff sought, inter alia,
compensatory damages for mental anguish caused by a
denial of benefits. 481 U.S. at 61. Even though such relief
is not available under S 502(a), the Court held that ERISA
completely preempted his claim and, thus, removal was
proper. Id. at 67. While the Court considered only Section
501(a)(1)(B), the Court's language applies broadly to all of
Section 502(a). See id. at 66 ("Congress has clearly
manifested an attempt to make causes of action within the
scope of the civil enforcement provisions of S 502(a)
removable to federal court.")

Similarly, in Ingersoll-Rand, the Court discussed the
interaction of Sections 510 and 502(a) in the context of a
plaintiff's requested relief. See 498 U.S. at 145. It wrote:

       Not only is S 502(a) the exclusive remedy for vindicating
       S 510-protected rights, but there is no basis in
       S 502(a)'s language for limiting ERISA actions only to
       those which seek "pension benefits." . . . Consequently,
       it is no answer to a pre-emption argument that a
       particular plaintiff is not seeking recovery of pension
       benefits.

                                7
Id.5

In explaining complete preemption in Ingersoll-Rand, the
Court applied the rationale of ordinary preemption to
complete preemption:

       "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 S 502(a) of the statute asfinally
       enacted . . . provide strong evidence that Congress did
       not intend to authorize other remedies that it simply
       forgot to incorporate expressly."

Ingersoll-Rand, 498 U.S. at 144 (quoting Pilot Life Ins. Co.
v. Dedeaux, 481 U.S. 41, 54 (1987) (internal citations and
quotation marks omitted)). Were we to hold that Wood's
claim is not preempted because he sought remedies not
provided for in Section 502(a), we would undermine
Congress' policy choices as reflected in the remedies it set
forth in Section 502(a). Given that "Congress viewed
[Section 510] as a crucial part of ERISA" Ingersoll-Rand Co.,
498 U.S. at 143, we are mindful of these policy choices.
Cf. Franchise Tax Board v. Construction La borers Vacation
Trust, 463 U.S. 1, 25-26 (1983) (finding state cause of
_________________________________________________________________

5. While this quoted portion of the opinion in Ingersoll-Rand may be
dicta, it is still sound analysis. The dissent argues that we should not
give Ingersoll-Rand, 498 U.S. 133, any weight because the statements on
which we rely are dicta. According to the dissent, when the Court stated,
"when it is clear or may fairly be assumed that the activities which a
state purports to regulate are protected by S 510 of ERISA, due regard
for the federal enactment requires the state jurisdiction to yield," id.
at

145 (emphasis added), this is not a significant statement. We disagree.
The Court, even though it did not have to make that statement in the
Ingersoll-Rand case, did so, it seems, because it wanted to point out that
S 510 does not stand alone and that S 502(a) and S 510 must be read
together. It is because of this interaction -- an interaction found in the
plain words of S 510, see 29 U.S.C.S 1140 -- that we find that Wood's
claim is completely preempted. The dissent is reluctant to recognize that
interaction.

                               8


action not completely preempted where "State's right to
enforce its tax levies is not of central concern to" ERISA).

We note that Wood, while seeking money damages for his
allegedly improper termination in his state claim, see State
Complaint, A-19, seeks equitable damages for the same
termination in his federal ERISA claim. See Federal
Complaint, A-103. Allowing such parallel claims to be tried
in both state and federal courts would undermine Congress'
choice of remedies as reflected in Section 502(a). See, e.g.,
Engelhardt v. Paul Revere Life Ins., 139 F.3d 1346, 1354,
n.11. (11th Cir. 1998) ("Although an ERISA beneficiary
cannot obtain punitive damages in an action for benefits,
the prayer for punitive damages does not take [plaintiff's]
claim out of the scope of [Section 502(a)]. If it did, any
plaintiff could thwart Congress's intent to completely
preempt claims arising out of the denial of ERISA benefits
by artful pleading.") Complete preemption would be an
empty doctrine if a plaintiff could plead his way into state
court by seeking only money damages. See, e.g., Rice v.
Panchal, 65 F.3d 637, 640 (7th Cir. 1995) ("[I]f a claim is
within S 502(a) then a participant's ability to recover
damages is limited.")

For these reasons, we find that ERISA preempted Wood's
state claim of discrimination, that we have jurisdiction,
and, thus, we affirm the District Court's denial of remand.

IV. Arbitration

Before turning to the issue whether Wood's claims are
arbitrable, we must consider our jurisdiction over the
arbitration issue. We reject Prudential's contention that we
do not have jurisdiction to consider the decision to compel
arbitration.

We have held that where a district court's dismissal of an
action signifies that the arbitration is "not a part of any
ongoing proceeding," the court of appeals has jurisdiction
from a final order. Nationwide Ins. Co. of Columbus, Ohio v.
Patterson, 953 F.2d 44, 46 (3rd Cir. 1991). In Nationwide,
we reviewed a district court's decision to dismiss a case on
the grounds that the parties were obliged to arbitrate.
There, we stated: "[A]lthough the result of the district

                               9


court's order is that the parties will arbitrate their dispute,
the district court's dismissal of [the] action plainly signifies
that this is not a part of any ongoing proceeding. Therefore,
we hold that we have appellate jurisdiction." Id. In
Nationwide, we held the matter a reviewablefinal order in
spite of "the practical effect of the district court's order
. . . that the parties will now submit their dispute to
arbitration." Id. at 45.

To distinguish Nationwide, Prudential seeks to make the
point that the District Court in this case faced a motion to
compel arbitration while the District Court in Nationwide
granted a motion to dismiss and made no order to
arbitrate. No matter how the motion is drawn, the District
Courts' conclusions were the same: both in Nationwide and
in this case, the District Court appropriately dismissed the
action upon motion.

We next consider the District Court's decision to compel
arbitration. Our review is plenary. See Hoxworth v. Blinder,
Robinson & Co., Inc., 980 F.2d 912, 925 (3rd Cir. 1992).
The U.S. Supreme Court has held that:

       [A]s a matter of federal law, any doubts concerning the
       scope of arbitration should be resolved in favor of
       arbitration, whether the problem at hand is the
       construction of the contract language itself or an
       allegation of waiver, delay, or a like defense to
       arbitrability.

Moses H. Cone Memorial Hospital v. Mercury Constr. Corp.,
460 U.S. 1, 24-25 (1983) (emphasis added). In order to
obtain a finding that arbitration is waived, a party seeking
to avoid arbitration must demonstrate prejudice. See
Hoxworth, 980 F.2d at 925 ("prejudice is the touchstone for
determining whether the right to arbitrate has been
waived.").

Wood argues that Prudential waived its right to arbitrate
because, in a joint discovery plan filed June 12, 1988,
Prudential "reserve[d] the right to file a motion to compel
arbitration on or before August 1, 1998," and, then, did not
act on that intention until September 24, 1998, when it
filed its motion to compel arbitration.

                               10


We hold that Prudential did not waive its right to
arbitrate; the delay was short and Prudential did not
engage in significant litigation action that could have
caused prejudice to Wood. It delayed seeking arbitration
only by one-and-a-half months. Cf. Hoxworth, 980 F.2d at
926 (finding waiver where delay was eleven months).
Prudential's litigation tactics had not been extensive: it had
not taken any depositions nor served any discovery
demands. Prudential does not appear to have been"able to
use the Federal Rules to conduct discovery not available in
the arbitration forum." Hoxworth, 980 F.2d at 926. While
Prudential contested the merits of the claims in District
Court, this is not enough to overcome the presumption of
arbitrability. See Moses H. Cohn, 460 U.S. at 24-25.

To establish prejudice, Wood argues that Prudential's
delay put him at a strategic disadvantage. He states that
his "counsel made key litigation decisions based upon his
belief that Prudential had abandoned its initial intention to
seek arbitration of this controversy," specifically that
"counsel would have asked the District Court to withhold
any ruling on the defendant's motion to dismiss. . .." The
District Court considered that motion and dismissed the
Americans with Disability Act claim but not the ERISA
claim. Putting aside whether the District Court would have
agreed to a request to withhold such a ruling, we do not
understand how Wood could be prejudiced by the Court's
having decided the matter. For this decision to be
prejudicial, we would have to presume that an arbitrator
would have decided the merits of the claim differently -- a
presumption we cannot make.

Wood argues that the arbitration agreement does not
apply to his claims of defamation and of intentional
infliction of emotional distress because they both arose
after the termination of his employment. The arbitration
agreement applicable to this case is contained in a National
Association of Securities Dealers ("NASD") Uniform
Application for Securities Industry Registration ("U-4 Form")
and calls for arbitration of any dispute, claim or
controversy between Wood and Prudential "to be arbitrated
under the rules . . . or by-laws of [the NASD]." A-246. It
requires arbitration under the NASD Code of any claim

                                 11


"arising out of the employment or termination of
employment of such associated person(s) with such

member. . . ." A-254, NASD Manual (CCH) S10201.

Wood's claim of defamation is based on Prudential's
forwarding of Wood's termination letter to the New Jersey
Department of Insurance. State Complaint PP 6, 11, A-17,
19. In that letter, Prudential referenced Wood's alleged
violations of company rules. A-23. Since the alleged
defamation was a description of Wood's activities while
employed at Prudential and was contained in Wood's
termination letter, we hold that the claim of defamation
arose out of his employment and its termination. Thus,
Wood's defamation claim is arbitrable.

Wood's claim of   intentional infliction of emotional distress
also arises out   of Wood's employment and its termination.
He alleges that   Prudential's actions "were outrageous, by
reason of [its]   use of false and defamatory allegations of
wrongdoing as a pretext for the termination of the plaintiff.
. . ." State Complaint P 14, A-20. Again, the claim centers
on Wood's termination and is, thus, covered by the
arbitration agreement.

Wood also contends that the arbitration agreement does
not apply to his state law discrimination claim because of
an amendment to the NASD rules. We disagree. The
amendment, effective January 1, 1999, exempts from
mandatory arbitration "claim[s] alleging employment
discrimination . . . in violation of a statute." Rule 10201(b)
of NASD Code of Arbitration Procedure, A-525. Because the
amendment was not effective until January 1, 1999, it did
not affect the arbitration agreement between these two
parties which requires Wood to comply with arbitration as
defined by the NASD Code at the time he filed suit in 1998.
See Seus v. John Nuveen & Co., Inc., 146 F.3d 175, 187
(3rd Cir. 1998) ("[The] Form U-4 compliance clause
obligates a registrant to comply with the NASD arbitration
code as it existed at the time she filed suit.").

We hold, thus, that the arbitration agreement applies to
Wood's state law claims of discrimination, defamation, and
intentional infliction of emotional distress. Wood does not
dispute that the arbitration agreement applies to his other

                               12


claims. Thus, we affirm the District Court's ruling to
compel arbitration over all the claims in these consolidated
cases.

V. Conclusion

We affirm the District Court's decision to deny remand of
Wood's state suit. We also affirm the District Court's
decision to compel arbitration as to all claims in the
consolidated suits.

                               13


Stapleton, J., dissenting:

Because I conclude that the District Court lacked
jurisdiction, I respectfully dissent.

I.

Generally, "the `well-pleaded complaint rule' requires
that, for removal to be appropriate, a federal question must
appear on the face of the complaint." Joyce v. RJR Nabisco
Holdings Corp., 126 F.3d 166, 171 (3d Cir. 1997). "Under a
narrow exception to the well-pleaded complaint rule,
however, Congress may `completely preempt' a particular
area of law such that any claim that falls within this area
is `necessarily federal in character.' " Id. "Complete
preemption" must be distinguished from "ordinary
preemption." Complete preemption is a jurisdictional
doctrine, whereas ordinary preemption is merely a federal
defense that does not create removal jurisdiction. See id.

Absent diversity or some other independent basis for
federal jurisdiction, a federal court has no jurisdiction to
entertain a complaint removed from a state court that relies
on state law ordinarily preempted by ERISA. Cf. Caterpillar
Inc. v. Williams, 482 U.S. 386, 398 (1987) ("The fact that a
defendant might ultimately prove that a plaintiff's claims
are pre-empted under the NLRA does not establish that
they are removable to federal court."); Goepel v. National
Postal Mail Handlers Union, 36 F.3d 306, 316 (3d Cir. 1994)
(" `State courts are competent to determine whether state
law has been preempted by federal law,' and, absent
complete preemption, `they must be permitted to perform
that function' with regard to state law claims brought
before them."). As a result, such a complaint, if removed,
must be returned to state court. The defendant's remedy is
to seek dismissal or summary judgment in the state court
on the grounds of preemption.

If a claim based on state law is completely preempted,
however, it is treated as a federal claim; a district court has
federal question removal jurisdiction to entertain it, and the
claim, after removal, should go forward in the district court
as a federal claim. See International Brotherhood of Elec.
Workers, 481 U.S. 851, 862-63 (1987) (afterfinding

                               14


complete preemption, considering the merits of plaintiff's
suit "treated as a S 301 claim"); Antol v. Esposto, 100 F.3d
1111, 1114-15 (3d Cir. 1997) (after determining that it had
complete preemption removal jurisdiction, district court
adjudicated claim on the merits); see also Pilot Life Ins. v.
Dedeaux, 481 U.S. 41, 56 (1987) (complete preemption
results from Congress' intent that suits "be treated as
federal questions governed by S 502(a)"); Charles Alan
Wright et al., Federal Practice and Procedure S 3722.1, at
511 (3d ed. 1998) (explaining that complete preemption
substitutes a federal cause of action for the preempted
state cause of action).

Section 514(a) of ERISA broadly preempts "any and all
State laws insofar as they relate to any employee benefit
plan," but this is ordinary preemption only, and does not
create federal removal jurisdiction. Joyce, 126 F.3d at 171
(quoting 29 U.S.C. S 1144(a)). "Only state claims that come
within ERISA's civil enforcement provisions in S 502(a) are
completely preempted such that removal to federal court is
appropriate." Id. State causes of action for wrongful
discharge motivated by the desire to prevent a pension from
vesting fall squarely within the ambit of S 510 and are
ordinarily preempted by ERISA. See Ingersoll-Rand, 498
U.S. at 140, 142-45. Ordinary preemption under ERISA,
without more, however, does not convert a state claim into
one that is necessarily federal for jurisdictional purposes.
See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64
(1987).

In Metropolitan Life, the Court did find that the civil
enforcement provision in S 502(a)(1)(B) has complete
preemptive power, but in doing so, it stated that:

       [e]ven with a provision such as S 502(a)(1)(B) that lies
       at the heart of a statute with the unique preemptive
       force of ERISA, however, we would be reluctant tofind
       that extraordinary preemptive power, such as has been
       found with respect to S 301 of the LMRA, that converts
       an ordinary state common law complaint into one
       stating a federal claim for purposes of the well-pleaded
       complaint rule.

Id. at 65. The Court based its finding of complete
preemption on strong evidence of Congressional intent, not

                                15


merely to preempt state law, but to invoke the jurisdictional
doctrine of complete preemption. In particular, the Court
relied on the fact that "the language of the jurisdictional
subsection of ERISA's civil enforcement provisions closely
parallels that of S 301 of the LMRA," which the Court had
already interpreted as giving rise to complete preemption at
the time that ERISA was drafted. Id. (citing 29 U.S.C.
S 1132(f) and 29 U.S.C. S 185(a)). The Court also noted
legislative history stating that:

       [w]ith respect to suits to enforce benefit rights under
       the plan or to recover benefits under the plan . .. they
       may be brought not only in U.S. district courts but also
       in state courts of competent jurisdiction. All such
       actions . . . are to be regarded as arising under the
       laws of the United States in similar fashion to those
       brought under section 301 of the Labor-Management
       Relations Act of 1947.

Id. at 65-66 (quoting H.R. Conf. Rep. No. 93-1280, p. 327
(1974)). The Court concluded that "[n]o more specific
reference to the Avco rule can be expected and the rest of
the legislative history consistently sets out this clear
intention to make S 502(a)(1)(B) suits . . . federal questions
for the purposes of federal court jurisdiction in like manner
as S 301 of the LMRA." Id. at 66.

A similar analysis leads to the conclusion thatS 510
standing alone does not have the "extraordinary"
preemptive power that converts a state law claim into a
federal one for jurisdictional purposes, and that therefore
claims that seek impermissible relief for a pension-defeating
termination and thus fall within S 510 but notS 502(a) are
not removable. The scope of the jurisdictional subsection
on which Metropolitan Life relied for itsfinding of complete
preemption is expressly defined in terms of the relief
sought, rather than the nature of the cause of action. See
29 U.S.C. S 1132(f) ("The district courts .. . shall have
jurisdiction . . . to grant the relief provided for in subsection
(a) of this section in any action.). Moreover, the House
Report cited by Metropolitan Life expressly invokes the
doctrine of complete preemption twice: "[w]ith respect to
suits to enforce benefit rights under the plan or to recover
benefits under the plan," H.R. Conf. Rep. No. 93-1280,

                               16


1974 U.S.C.C.A.N. 5038, 1974 WL 11542, at 166, and
"suit[s] to recover benefits denied contrary to the terms of
[the] plan," id. at 356-57. No such express reference to
complete preemption appears in the discussion of the
protection against pension-defeating discharge. See id. at
357. Thus neither the statute nor the legislative history
provide any evidence of Congressional intent to expand the
scope of ERISA's complete preemptive power beyond those
actions that fall within the civil enforcement provisions of
S 502(a) to actions under S 510 that seek impermissible
relief.

This Court's precedent also supports the conclusion that
claims seeking legal relief for violations of S 510 are only
ordinarily preempted, and that federal jurisdiction is thus
improper. This Court has recognized two prerequisites for a
finding of complete preemption. "[C]omplete preemption
applies only if `the statute relied upon by the defendant as
preemptive contains civil enforcement provisions within the
scope of which plaintiff's state claim falls," and there must
also be a "clear indication of a Congressional intention to
permit removal despite the plaintiff's exclusive reliance on
state law." Goepel v. National Postal Mail Handlers Union,
36 F.3d 306, 311 (3d Cir. 1994). Although ERISA provides
a civil enforcement provision for violations ofS 510, if
Wood's claims do not seek equitable relief, they do not fall
"within the scope" of that provision. Furthermore, although
there is clear evidence of Congressional intent to permit
removal of actions within the scope of the civil enforcement
provisions, which actions necessarily are potentially viable
federal actions, there is no indication of Congressional
intent to permit removal of actions that seek impermissible
remedies and thus cannot be viable and must be
dismissed.

The Supreme Court's dicta in Ingersoll-Rand does not
require a different result. Although Ingersoll-Rand was a
case of ordinary preemption,1 after determining that
S 502(a) provides the exclusive remedy for violations of
S 510 the Court stated that " `when it is clear or may fairly
_________________________________________________________________

1. The case had been decided in Texas state courts, and thus federal
jurisdiction was not at issue. See Ingersoll-Rand, 498 U.S. at 481.

                               17


be assumed that the activities which a State purports to
regulate are protected' by S 510 of ERISA,`due regard for
the federal enactment requires that state jurisdiction must
yield.' " Id. (quoting Lingle v. Norge Division of Magic Chef,
Inc., 486 U.S. 399, 409 n.8 (1988) (a case of ordinary,
rather than complete preemption)). Although the majority
reads this statement as suggesting that S 510 itself has
complete preemptive effect, to be consistent with
Metropolitan Life this statement must be read in context,
which is that Ingersoll-Rand was a case of ordinary
preemption in which federal jurisdiction was not at issue.
This context suggests that it is not state court jurisdiction
that must yield when regulated activities fall within S 510,
but rather the State's jurisdiction to regulate such
activities, that is, mere ordinary preemption. Indeed, the
dicta at issue immediately follows and supports the Court's
holding that "the requirements of conflict pre-emption are
satisfied in this case." Id.

Contrary to the majority's assertion, Metropolitan Life
does not stand for the proposition that state law claims
may fall within S 502(a) and be completely preempted even
if the plaintiff asks only for relief that is not available under
S 502(a). While it is true that the plaintiff there claimed
"compensation for mental anguish caused by breach of
. . . contract" he also claimed "reimplementation of all
benefits," the paradigm of S 502(a) relief. Metropolitan Life
Ins. Co., 481 U.S. at 61. Accordingly, as the Court expressly
pointed out, "General Motors and Metropolitan removed to
federal court alleging federal question jurisdiction over the
disability benefit claim by virtue of ERISA and pendant
jurisdiction over the remaining claims." Id. Thus, it was the
claim for reinstatement of benefits that gave the Court
jurisdiction to consider whether the state law claims
seeking impermissible remedies were ordinarily preempted
by ERISA.

The fact that the plaintiff seeks remedies in his state
cause of action that are unavailable under the federal cause
of action clearly does not preclude a finding of ordinary
preemption; indeed, ordinary preemption of inconsistent
state remedies is the very purpose of the ERISA's limited
civil actions provision and its broad ordinary preemption

                               18


provision. See Pilot Life Ins. Co. v. Dedeaux , 481 U.S. 41,
51-54 (1987) ("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."). Ordinary preemption, however, is for state courts
to determine.

II.

Given that S 510 does not by itself have complete
preemptive effect, it becomes necessary to determine
whether Wood's claims fall within the civil enforcement
provisions of S 502(a). Section 502(a) provides that:

       A civil action may be brought--

       (1) by a participant or beneficiary--

         . . .

         (B) to recover benefits due to him under the
       terms of his plan, to enforce rights under the
       terms of the plan, or to clarify his rights to
       future benefits under the terms of the plan;

       . . .

       (3) by a participant, beneficiary, or fiduciary (A) to
       enjoin any act or practice which violates any
       provision of this subchapter or the terms of the plan,
       or (B) to obtain other appropriate equitable relief (i)
       to redress such violations or (ii) to enforce any
       provisions of this subchapter or the terms of the
       plan . . . .

29 U.S.C. 1132(a).

Section 510 of ERISA prohibits employers from
discharging employees for the purpose of preventing a
pension from vesting. See Ingersoll-Rand Co. v. McClendon,
498 U.S. 133, 143 (1990). Section 510 provides that:

       It shall be unlawful for any person to discharge . .. a
       participant or beneficiary . . . for the purpose of
       interfering with the attainment of any right to which

                               19


       such participant may become entitled under the plan
       . . . . The provisions of section 1132 of this title[S 502
       of ERISA] shall be applicable in the enforcement of this
       section.

29 U.S.C. 1140. Claims under S 510 are enforced under
S 502(a)(3). See Zipf v. American Tel. & Tel. Co., 799 F.2d
889, 891 (3d Cir. 1986); see also Ingersoll Rand , 498 U.S.
at 143-44 (quoting only S 502(a)(3) and then stating that
S 502(a) provides the remedy for violations ofS 510). Since
this is not a suit to recover benefits or to enforce rights
under a plan, the only potential avenue for finding Wood's
state law claims are completely preempted is if they are
claims under S 502(a)(3) to obtain "appropriate equitable
relief to redress [a] violation[ ] of[S 510]." 29 U.S.C.
1132(a)(3).

In the instant case, it may well be that Wood's state
causes of action include a claim that falls within the ambit
of S 510, in that they assert that Wood's discharge was
motivated by a desire to prevent his pension from vesting.
I would conclude, however, that any such claim does not
fall within S 502(a)(3), which reaches only claims for
equitable relief. See 29 U.S.C. 1132(a)(3); Mertens v. Hewitt
Assocs., 508 U.S. 248, 255-62 (1993) (holding that
compensatory damages are unavailable under S 502(a)(3),
which provides for equitable relief only); In re Unisys Corp.
Retiree Med. Benefit "ERISA" Litig., 57 F.3d 1255, 1268-69
(3d Cir. 1995); Spinelli v. Gaughan, 12 F.3d 853, 857 (9th
Cir. 1993) (recognizing that Mertens' holding that damages
are not available under S 502(a)(3) applies toS 510 claims).

Wood seeks solely money damages. To the extent that his
claim falls within the scope of S 510, the damages claimed
are to compensate him for injuries inflicted by tortious
behavior -- i.e., interference with a relationship that would
ultimately have brought him pension benefits from a third
party, the ERISA plan. Wood's claim cannot be
characterized as an equitable one for restitution because
the money sought is not being wrongfully held by the
employer. Nor can the damages sought accurately be
characterized as incidental to or intertwined with injunctive
relief (and thus equitable in nature) because no equitable
relief is sought. Finally, a monetary award here cannot be
                                 20


viewed as an alternative to the equitable remedy of
reinstatement (by analogy to a Title VII front pay award)
both because Wood does not allege that reinstatement is
unfeasible and, more importantly, because reinstatement
would not result in his receiving pension benefits from the
employer. What we have here, plain and simple, is a tort
action seeking compensatory damages for interference with
advantageous relations, and Wood is accordingly not
seeking an equitable remedy. Case law from our court and
the Supreme Court dictates, in my judgment, that we so
hold.

In Teamsters v. Terry, 494 U.S. 558 (1990), union
members sought damages against the union for breach of
the duty of fair representation. The union insisted that the
plaintiffs were seeking an equitable remedy and that they
were not entitled to a jury trial. The Court concluded to the
contrary, observing:

       [B]ecause we conclude that the remedy respondents
       seek has none of the attributes that must be present
       before we will find an exception to the general rule and
       characterize damages as equitable, we find that the
       remedy sought by respondents is legal.

       First, we have characterized damages as equitable
       where they are restitutionary, such as in "action[s] for
       disgorgement of improper profits," Tull, 481 U.S., at
       424. See also Curtis v. Loether, supra , at 197; Porter v.
       Warner Holding Co., 328 U.S. 395, 402 (1946). The
       backpay sought by respondents is not money
       wrongfully held by the Union, but wages and benefits
       they would have received from McLean [, the employer,]
       had the Union processed the employees' grievances
       properly. Such relief is not restitutionary.

       Second, a monetary award "incidental to or
       intertwined with injunctive relief may be equitable. Tull,
       supra, at 424. See, e.g., Mitchell v. Robert DeMario
       Jewelry, Inc., 361 U.S. 288, 291-292 (1960) (District
       Court had power, incident to its injunctive powers, to
       award backpay in that case was restitutionary).
       Because respondents seek only money damages, this
       characteristic is clearly absent from the case.

                                 21


Teamsters, 494 U.S. at 570-71.
The Terry Court distinguished on a number of grounds
the Title VII cases that characterize backpay awards as a
form of "equitable relief." First, the Court pointed out that
Congress had specifically characterized backpay under Title
VII as "equitable relief." Id. at 572. Second, and most
important for present purposes, the Court noted that
"backpay sought from an employer under Title VII would
generally be restitutionary in nature . . ., in contrast to the
damages sought here from the Union" to compensate for
income the plaintiff would have received from the employer
had there been no breach of the duty of fair representation.
Id.; see also Woodell v. International Bd. of Elec. Workers,
502 U.S. 93, 97-98 (1981) (holding in a suit by a union
member against his union for discrimination in job referrals
in the operation of its hiring hall that a "claim for lost
wages cannot be treated as restitutionary . . . as the
damages sought are for pay for jobs to which the union
failed to refer him").

This Court followed a similar line of reasoning in Richel
v. Commissioner, 900 F.2d 655, 664, n.16 (3d Cir. 1990),
where we explained that a restitutionary award
representing wages earned but not paid is to be
distinguished from an award compensating for the inability
to earn an income from another source due to tortious
interference.

There is one Third Circuit case that recognizes the
availability of front pay in a Title VII case as"an alternative
to the traditional remedy of reinstatement" prior to the
statutory amendment that made damages available under
Title VII. See Goss v. Exxon Office Systems Co., 747 F.2d
885 (3d Cir. 1984). Goss does not help Wood, however. As
Goss and the ADEA cases (the ADEA has always authorized
legal and equitable remedies) recognize, a front pay remedy
is available only where reinstatement is not an available
remedy. See, e.g., Maxfield v. Sinclair Intern., 766 F.2d 788
(3d Cir. 1985). Moreover, unlike front pay, recovery on the
claim here asserted would not be a substitute for a
reinstatement remedy since reinstatement would not call
for the defendant to pay Woods' pension benefits.

                                22


Based on the foregoing, I conclude that the District Court
had no jurisdiction over the claims made in the state
complaint and should have remanded those claims to the
state court, where Prudential may raise its preemption
defense.

A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit

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