## Facts

- New Jersey Transit Corporation sponsored an ERISA-governed employee welfare benefit plan providing basic life insurance, funded through a group policy issued by Metropolitan Life Insurance Company (MetLife).
- MetLife served as the plan’s claims fiduciary responsible for administering benefit claims under the plan documents and ERISA.
- Paul Price, a New Jersey Transit bus driver, enrolled for $20,000 in life-insurance benefits and later died, leaving a widow (Sandra Price) and two children from a prior marriage (Shannon and Andre Price).
- MetLife determined that Paul had designated Sandra as the primary beneficiary and denied the children’s claims on the ground that benefits must be paid to the named beneficiary under the plan.
- The children asserted entitlement based on a New Jersey divorce judgment requiring Paul to name the children as irrevocable beneficiaries until Andre’s emancipation; Andre was not emancipated at Paul’s death.
- Faced with competing demands and potential conflict between the beneficiary designation and the divorce decree, MetLife filed a statutory interpleader action under 28 U.S.C. § 1335 to deposit the proceeds and obtain a judicial determination of the proper beneficiary.
- The district court raised subject-matter jurisdiction on its own and dismissed, concluding there was no federal-question jurisdiction under ERISA (and no diversity). MetLife appealed on the federal-question issue.

## Issues

1. Whether an ERISA plan fiduciary’s statutory interpleader action to resolve competing claims to plan benefits arises under federal law, supporting federal-question jurisdiction under 28 U.S.C. § 1331.
2. Whether ERISA’s complete preemption doctrine applies to the claimants’ competing benefit claims such that the dispute is necessarily federal in character despite being pled as interpleader.

## Decision

- The Third Circuit held the district court had federal-question jurisdiction under § 1331.
- The court concluded the dispute turned on ERISA-governed rights and fiduciary duties and that ERISA completely preempted the state-law basis advanced for entitlement to benefits.
- The court vacated the dismissal for lack of subject-matter jurisdiction and remanded for further proceedings.
- The court did not decide the proper beneficiary on the merits.

## Legal Principles

- Federal-question jurisdiction may exist where the underlying controversy in an interpleader action necessarily requires interpretation and application of ERISA and ERISA plan documents.
- ERISA § 502(a) complete preemption can convert state-law benefit-entitlement claims into federal claims for jurisdictional purposes when the claims seek to determine rights to benefits under an ERISA plan.
- Interpleader is a procedural device and does not control the jurisdictional character of the underlying dispute; if the benefits rights derive from ERISA and its civil enforcement scheme, the action may arise under federal law.
- An ERISA fiduciary’s duty to administer benefits in accordance with plan documents (and ERISA) can make a beneficiary dispute involving asserted state domestic-relations obligations a federally governed controversy.

## Conclusion

The Third Circuit ruled that a plan fiduciary’s interpleader to determine the proper recipient of ERISA plan benefits arose under federal law because the competing claims were completely preempted and required applying ERISA and the plan documents, warranting federal-question jurisdiction and remand for merits proceedings.


Metropolitan Life Ins. Co. v. Price, 501 F.3d 271 (3d Cir. 2007)