Opinion
Docket No. 113577.
Decided December 7, 1989.
Snyder Handler, P.C. (by David S. Snyder and Michael W. Bartnik), for plaintiff.
James C. Curtiss, for defendant.
The Michigan Supreme Court has vacated our prior order in this matter and remanded for reconsideration as on leave granted in light of Teper v Park West Galleries, Inc, 431 Mich. 202; 427 N.W.2d 535 (1988), reh den 431 Mich. 1207 (1988). See 431 Mich. 900 (1988). Upon reconsideration, we reverse the trial court's decision with respect to Count II of plaintiff's complaint but affirm as to Count III.
This case concerns whether plaintiff's state law claims for breach of contract and misrepresentation are preempted by § 514 of the Employee Retirement Income Security Act, 29 U.S.C. § 1144(a) (ERISA). Plaintiff, a long time salaried employee of defendant, took a voluntary early retirement effective June 1, 1982, twelve years prior to his scheduled retirement. As a salaried employee, plaintiff was an eligible participant and beneficiary in defendant's General Retirement Plan, an employee benefit plan under the ERISA. This plan entitled plaintiff to receive both basic retirement benefits and certain supplemental benefits.
Plaintiff alleged that, prior to deciding to accept early retirement, he reviewed various documents, bulletins and notices provided by defendant, attended early retirement seminars, and met with members of defendant's personnel staff in order to ascertain the various benefits to which he would be entitled. Plaintiff alleged he specifically inquired about entitlement to supplemental benefits under the plan, and was informed that outside earnings in excess of a given sum during a calendar year would cause a penalty deduction in the supplemental benefits for the balance of that calendar year. In particular, plaintiff alleged he was informed that the penalty reductions applied only to excess earnings for the same calendar year and that calculations began anew at the beginning of each successive calendar year.
After accepting the early retirement offer, plaintiff obtained outside employment and reported his earnings as required under the plan. Thereafter, however, plaintiff alleged he was informed, contrary to his prior understanding, that his excess earnings for that calendar year would be applied cumulatively and operate to deprive him of supplemental benefits otherwise due in subsequent years until the excess earnings had been fully consumed.
After plaintiff was informed the supplemental benefits would not be paid in accordance with his understanding, he commenced the instant action with the filing of a three-count complaint. Count I of his complaint sought declaratory relief regarding his rights to supplemental benefits under the plan. Count II contained an action for breach of contract based upon the various publications provided by defendant describing the supplemental benefits available under the plan. Finally, Count III contained an action for misrepresentation wherein plaintiff alleged that he was induced into accepting early retirement in reliance upon various representations by defendant that proved to be false. Plaintiff alleged that, but for the representations, he would not have surrendered his then existing seniority, salary and fringe benefit package.
After the lower court denied defendant's motion for summary disposition as to all three counts, an application for leave to appeal to this Court was filed. We denied leave with respect to Count I, but reversed the lower court's decision with respect to Counts II and III, finding that plaintiff's claims were preempted by 29 U.S.C. § 1144. Plaintiff then sought leave to appeal our ruling to the Michigan Supreme Court which, in lieu of granting leave to appeal, vacated our decision and remanded back to us for reconsideration as on leave granted in light of Teper, supra.
Initially, we note that consideration of the lower court's ruling with respect to Count I of plaintiff's complaint is not properly before us inasmuch as we originally declined to grant leave on this claim and plaintiff's application for leave to appeal to the Supreme Court addressed Counts II and III only. Accordingly, we will not address this claim.
Additionally, we disagree with plaintiff's contention that the law of the case doctrine requires us to rule that his claims are not preempted. Plaintiff correctly points out that, where a case is taken on appeal to a higher appellate court, the law of the case announced in the higher appellate court supersedes that set forth in the intermediate appellate court, Johnson v White, 430 Mich. 47, 53; 420 N.W.2d 87 (1988).
However, plaintiff is incorrect in his assertion that the effect of the Supreme Court's order in this case was to reverse this Court's prior order. First, leave to appeal was never granted by the Supreme Court. Instead, it vacated our prior decision in lieu of granting leave. Thus, there was never any decision by the Supreme Court and no law of the case established there. Second, the order of the Supreme Court did not reverse our prior order as apparently contended by plaintiff, but merely vacated it with directions to reconsider plaintiff's claims in light of Teper. Accordingly, the law of the case doctrine does not apply in this case.
With respect to the remaining two claims, we are required to determine whether plaintiff's actions for breach of contract and misrepresentation "relate to" defendant's retirement plan. Under the ERISA, state laws that "relate to" an employee benefit plan are expressly preempted. 29 U.S.C. § 1144(a). In Teper, supra, p 221, our Supreme Court found that a state law is preempted if it "relates to" an employee benefit plan by
1) altering the level of benefits which would be paid out under a given plan from state to state, 2) altering the terms of the plan such as requirements for eligibility, or 3) subjecting the fiduciaries of a plan to claims other than those provided in the ERISA itself.
The Court stated that ERISA preemption "turns upon whether state law places any fiscal, administrative, or legal burdens upon the plan." Teper, 218. In addition, the Court indicated that preemption exists only where there is a real, if only indirect, relationship between the challenged state law and an employee benefit plan. Teper, 220. The Court ultimately found that an award of future pension benefits in a wrongful discharge action against the employer, rather than the plan or fiduciary of the plan, did not "relate to" the plan and was not preempted.
We will first address plaintiff's claim for misrepresentation. In our view, this claim does not "relate to" the plan, and therefore, is not preempted by ERISA. Plaintiff's misrepresentation claim is not based upon any misrepresentation within the plan itself, but is, instead, based upon alleged representations made by the employer prior to plaintiff's participation in the plan. Further, plaintiff is not suing for actual supplemental benefits allegedly due under the plan, but is seeking damages for alleged misrepresentations concerning the amount of benefits plaintiff would ultimately be entitled to receive if he were to accept early retirement. In effect, plaintiff is claiming that, irrespective of the actual terms and conditions of the plan itself, he is entitled to additional damages, not under the plan, but pursuant to the various representations made by defendant. Additionally, plaintiff is not seeking to impose liability on either the plan or the fiduciary, but on the employer who allegedly made the false representations.
Accordingly, because plaintiff's misrepresentation claim is based upon representations independent of the plan itself, and does not seek actual benefits under the plan, the claim will not alter the level of benefits paid out under a plan from state to state, nor will it alter the terms of the plan. Further, because plaintiff's claim is against the employer, there is no danger that the fiduciary will be subjected to claims other than those provided in the ERISA. Finally, there is no fiscal, administrative or legal burden imposed on an employee benefit plan by requiring that the employer refrain from misrepresenting the availability of benefits.
Thus, in light of our Supreme Court's decision in Teper, supra, we are unable to conclude that plaintiff's misrepresentation claim "relates to" defendant's employee benefit plan. As a result, plaintiff's state law claim is not preempted by the ERISA. Accordingly, the trial court did not err in denying defendant's motion for summary disposition with respect to this claim.
We agree with defendant, however, that plaintiff's breach of contract claim "relates to" the plan and, thus, is preempted by the ERISA. The alleged breach of contract complained of in the complaint is the deprivation of "supplemental benefits due to plaintiff under the General Retirement Plan for salaried employees." Thus, plaintiff is seeking actual benefits alleged to be due under the plan, rather than benefits otherwise due pursuant to an independent contract. In this situation, plaintiff is attempting to have his entitlement to supplemental benefits under the plan determined on the basis of a breach of contract action governed by state law. By attempting to determine entitlement to supplemental benefits on the basis of state law, plaintiff's claim would clearly have the effect of altering the level of benefits payable under a given plan from state to state. Teper, supra, p 214. Therefore, plaintiff's breach of contract claim "relates to" defendant's employee benefit plan and is preempted by the ERISA. Accordingly, defendant was entitled to summary disposition as to the breach of contract claim.
Affirmed in part, reversed in part and remanded.