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GALEN v. MCALLISTER

September 4, 1992

DONALD I. GALEN, M.D., INC., and DONALD I. GALEN, M.D., Plaintiffs, -v.- MARY McALLISTER, INFORMATION SERVICES, INC., STEPHEN E. ANTIC, BUSINESS PLANNING SERVICES, INC., and DOES 1 through 25, inclusive, Defendants.

PATEL


The opinion of the court was delivered by: MARILYN HALL PATEL

Plaintiffs brought this action in state court alleging state law claims for breach of contract, professional negligence, fraud, breach of fiduciary duty and intentional infliction of emotional distress. Defendants are alleged to be consultants, administrators and recordkeepers of employee benefit plans established by plaintiffs' professional corporation. Defendants removed the action to this court based on preemption under the Employee Retirement Income Security Act Of 1974 ("ERISA"), 29 U.S.C. § 1002 et seq.

 Plaintiff moves to remand this action contending that the claims alleged in the complaint are not preempted by ERISA. This court has reviewed all the papers filed herein and agrees.

 THE ALLEGATIONS OF THE COMPLAINT

 The complaint alleges that defendants were retained by plaintiff employers to provide "professional administrative and consultative services for plaintiffs' Defined Benefit Pension Plan." Complaint at paragraphs 14 et seq. Plaintiffs assert that as a result of breaches of their respective duties plaintiffs were provided inaccurate information that adversely affected their funding decisions and resulted in additional expenses. They append to the complaint an agreement which they allege forms the basis of their breach of contract claim. The agreement, which is very brief, merely provides that:

 We have, by board resolution, adopted an Employee Benefit Plan and have appointed Contemporary Pensions, Inc. as agent to provide administrative services. We confirm that neither Contemporary Pensions, Inc. nor any of its affiliates nor their representatives have provided legal advice and counsel. We acknowledge that we should confer with our own legal counsel, should we so choose, on all matters pertaining to the suitability of an Employee Pension Plan and legal questions pertaining to the Plan and our participation in such a Plan. Ex. A to Complaint. *fn1"

 Among the other allegations of the complaint, one states that defendants "failed to amend plaintiffs' defined benefit pension plan to conform the plan to developments in the tax law. Complaint at paragraph 22.

 Defendants contend that, in reality, the claims in the complaint are ERISA claims disguised as professional negligence and other state law causes of action. Defendants have also moved to strike certain prayers for relief on the basis that they are not proper under ERISA.

 Whether an action is removable under 28 U.S.C. § 1441(b) as one presenting a federal question is to be determined from the face of a well-pleaded" complaint. Franchise Tax Board of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 9-12 (1983); Salveson v. Western States Bankcard Ass'n., 731 F.2d 1423 (9th Cir.1984). The party seeking removal bears the burden of establishing federal jurisdiction. Miller v. Grugurich, 763 F.2d 372 (9th Cir.1985). However, where artful pleading masks a true federal claim, the court may look behind the complaint to ascertain the true gravamen of the claims. Salveson, 731 F.2d at 1427-29.

 If the claims appear to involve employee benefit plans, the court must determine whether the claims are preempted under ERISA. Courts have repeatedly held that ERISA preemption is sweeping, acknowledging that Congress intended broad coverage and protection for the participants in and beneficiaries of employee benefit plans. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987). Since ERISA so completely preempts the field, actions within its ambit are removable. Id.

 However, not all claims that touch upon employee benefit plans are preempted. Retirement Fund Trust of the Plumbing v. Franchise Tax Board, 909 F.2d 1266, 1274 (9th Cir. 1990). The touchstone is whether the claim "has a connection with or reference to" an employee benefit plan. Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 8 (1987). The analysis in National Labor Relations Act ("NLRA") cases is instructive, although not parallel. There the courts have held that it is not the identity of the party bringing the action but the issues presented and whether they impinge upon the federal regulatory scheme. See Richardson v. Kruchko & Fries, 966 F.2d 153, 156-57 (4th Cir. 1992) (discussing Garmon preemption according to the leading case of San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959)).

 Defendants' assertions notwithstanding, although plaintiffs may be participants or beneficiaries of an ERISA-covered plan, they do not sue in that capacity; they sue as the employer or sponsor of the plan. Employers are not among those enumerated in 29 U.S.C. § 1132 as persons entitled to sue for enforcement of rights under ERISA. This Circuit has held that employers may bring an action under ERISA under certain circumstances. In Fentron Industries, Inc. v. National Shopmen Pension Fund, 674 F.2d 1300 (9th Cir. 1981), the court held that the employer was within the "zone of interests" protected by ERISA where the defendant Fund had cancelled pension credits and declined to process pension claims. The employer argued that this conduct threatened its relationship with the Shopmen's Union and the continued employment of its employees. The Ninth Circuit agreed, holding that the Congressional purpose of protecting employer-employee relations justified permitting employers to sue to effectuate such purpose. Fentron has been roundly criticized by other circuits. See, e.g., Tuvia Convalescent Center v. Nat'l. Union of Hospital and Health Care Employees, 717 F.2d 726, 729-30 (2d Cir. 1983) (noting cases from other courts in conflict with the Ninth Circuit's view).

 Despite Fentron, this Circuit has held that an employer cannot sue under ERISA unless it can allege "specific and personal" injuries resulting from a violation of ERISA. Assoc. Builders & Contractors v. Carpenters Vacation and Holiday Trust Fund for Northern ...


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