Facts
- General Motors (GM) established a disability benefit plan for salaried employees, insured by Metropolitan Life Insurance Company (Metropolitan) and governed by ERISA.
- Arthur Taylor, a GM employee and plan participant, sought disability benefits for emotional problems; Metropolitan paid benefits initially but later discontinued payments after physicians concluded he could return to work.
- Taylor later submitted a supplemental disability claim based on a prior back injury; Metropolitan denied the claim after medical evaluations concluded he could work.
- Taylor refused to return to work and his employment was terminated.
- Taylor sued Metropolitan and GM in Michigan state court asserting state common-law contract and tort claims seeking reinstatement of benefits and related relief.
- Defendants removed the case to federal court; the district court found removal proper and entered summary judgment for defendants.
- The Sixth Circuit reversed for lack of removal jurisdiction, reasoning that the complaint pleaded only state-law claims and that ERISA preemption was merely a defense under the well-pleaded complaint rule.
Issues
- Whether state common-law contract and tort claims seeking plan benefits are preempted by ERISA and fall within ERISA § 502(a)(1)(B).
- Whether such claims, although pleaded only under state law, are removable to federal court as claims “arising under” federal law due to ERISA’s civil enforcement scheme.
Decision
- The Supreme Court reversed the Sixth Circuit and held removal was proper.
- Taylor’s state common-law contract and tort claims were preempted by ERISA and fell within ERISA § 502(a)(1)(B), which supplies the exclusive cause of action for a participant seeking to recover benefits under an ERISA plan.
- Because § 502(a)(1)(B) completely preempts state-law claims within its scope, the complaint is recharacterized as federal from its inception and is removable under 28 U.S.C. § 1441(b) despite the well-pleaded complaint rule.
Legal Principles
- ERISA § 502(a)(1)(B) provides an exclusive federal cause of action for participants or beneficiaries seeking to recover benefits due under the terms of an ERISA-covered plan.
- When a state-law claim is preempted and also falls within the scope of ERISA § 502(a)(1)(B), ERISA operates as “complete preemption,” converting the state claim into a federal claim for jurisdictional purposes.
- Complete preemption under § 502(a)(1)(B) is a limited exception to the well-pleaded complaint rule: removal is permitted even if the federal basis does not appear on the face of the complaint.
- Common-law causes of action filed in state court that are preempted by ERISA and within § 502(a)(1)(B) are removable to federal court under 28 U.S.C. § 1441(b).
Conclusion
State-law claims that, in substance, seek benefits under an ERISA plan are displaced by ERISA’s exclusive civil enforcement remedy in § 502(a)(1)(B); because that displacement is complete preemption, such claims are treated as federal claims and may be removed to federal court even when pleaded solely as state-law contract or tort actions.