Parties often try to take advantage of the protection provided by ERISA’s preemption provisions when faced with a state-law claim involving a plan governed by ERISA. However, the involvement of an ERISA plan does not necessarily mean the claim is preempted. In Gardner v. Heartland Industrial Partners, LP, (2013, CA6) (2013 WL 1920875), the Sixth Circuit Court of Appeals considered this issue when faced with a claim for tortious interference with a contract that just happened to be an ERISA-regulated plan. In an opinion decided and filed on May 10, 2013, the Sixth Circuit set out the framework for analyzing the issue before finding that the claim was not preempted by ERISA.
Setting the Stage. In August 2006, defendant Heartland Industrial Partners, LP, agreed to sell its ownership interest in Metaldyne Corporation to Ripplewood Holdings. The deal would have triggered a $13 million obligation to some former executives of Metaldyne under the change-in-control provision of Metaldyne’s supplemental executive retirement plan, or SERP. Ripplewood threatened to back out of the deal upon learning of the SERP obligation. To keep the deal from falling apart, Metaldyne’s CEO convinced Metaldyne’s board to declare the SERP invalid.
After being notified that the SERP had been invalidated and they would not receive any benefits under the SERP, the former Metaldyne executives filed a state law claim against Heartland, Metaldyne’s CEO, and one of the Metaldyne board members for tortious interference with contractual relations based on the invalidation of the SERP. Defendants removed the case to federal court on the basis that it was completely preempted by ERISA, and filed a motion to dismiss the case on that ground. The district court agreed with Defendants and dismissed the case. Plaintiffs appealed.
Two-Prong Test. Section 502(a)(1) of ERISA provides for civil actions by a participant or beneficiary to recover benefits due under the terms of a plan subject to ERISA. The Supreme Court has said a state-law claim that, by its nature, is within ERISA Section 502(a)(1) is deemed to be a federal claim (for purposes of removal) and is completely preempted. A claim is within ERISA Section 502(a)(1) if (1) the plaintiff complains about being denied benefits to which he is entitled only because of the terms of an ERISA-regulated plan; and (2) the plaintiff does not allege the violation of any state or federal legal duty independent of ERISA or the plan. (See Aetna Health Inc. v. Davila, 542 U.S. 200 (2004)).
The Sixth Circuit focused on whether the former Metaldyne executives’ state-law claim was “independent” of ERISA or the SERP. Because their claim was based on the Defendants’ duty to not interfere with Plantiffs’ contract (the SERP agreement) with Metaldyne, the Sixth Circuit held that it was indeed independent. The court noted that a determination of the Defendants’ liability did not require interpretation of the SERP’s terms and that any damages would be paid from the Defendants’ assets, not the SERPs. Since the second prong of the test was not met ERISA did not completely preempt the claim. The district court’s dismissal of the Plaintiffs’ claim was reversed and the case was remanded with instructions for the district court to return the case to state court.