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Elizabeth Blaj, An Individual; and Sandra v. Stewart Enterprises

February 11, 2011


The opinion of the court was delivered by: Honorablelarryalanburns United States District Judge


At the summary judgment phase of this case, the Court dismissed Blaj's claim that Stewart fired her because of her medical condition, and it also dismissed her claim, under the Fair Employment and Housing Act, that Stewart failed to accommodate her medical condition. The Court did not dismiss, though, Blaj's ERISA claim that Stewart fired her for seeking coverage for a liver transplant under its health insurance plan. Specifically, the Court held,

The fact is that Blaj's attempt to have CIGNA cover her ongoing care at Scripps was acrimonious and seemingly endless, and the parties tell conflicting stories about their respective roles and duties. It would not be unreasonable for a jury to conclude that Stewart developed some animosity toward Blaj as a result of her attempts to obtain coverage under its health insurance plan, and that this animosity manifested itself in the decision to terminate her employment. (Doc. No. 50, pp. 18--19.) Now before the Court is Stewart's motion to strike Blaj's jury demand and dismiss her claims for monetary relief. Blaj's prayer for relief seeks compensatory damages (including lost wages and economic opportunities), mental and emotional distress damages, and punitive and exemplary damages; Stewart argues these damages are not available under ERISA.

I. Right to a Jury Trial

Blaj's ERISA claim is based upon section 510 of the law, which provides that [i]t shall be unlawful for any person to discharge, fine, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.

29 U.S.C. § 1140. This section further provides that section 502 shall govern enforcement, and under section 502(a)(3) a plan participant may only "enjoin any act or practice which violates" section 510 or"obtain other appropriate equitable relief." 29 U.S.C. § 1132(a)(3). Claims for equitable relief, however, don't trigger Blaj's constitutional right to a jury trial under the Seventh Amendment, and the Ninth Circuit has even held "plan participants and beneficiaries are not entitled to jury trials for claims brought under . . . section 502 of ERISA." Thomas v. Oregon Fruit Prods. Co., 228 F.3d 991, 996 (9th Cir. 2000).

Blaj is therefore not entitled to a jury trial on her ERISA claim, and her demand for one is STRICKEN.*fn1

II. Claims for Monetary Relief

The Court must now determine whether Blaj can seek monetary relief from Stewart even though ERISA section 502(a)(3) limits remedies to those that are equitable in nature. See Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210 (2002). But first, the Court notes that Blaj doesn't put up a fight with respect to emotional distress and punitive damages, and indeed, those are certainly not recoverable under ERISA. See Sokol v. Bernstein, 803 F.2d 532, 534 (9th Cir. 1986) ("damages for emotional distress are unavailable under § 502 (a)(3)"); Concha v. London, 62 F.3d 1493, 1504 (9th Cir. 1995) (punitive damages unavailable under section 502(a)(3)). At issue, then, is the availability of compensatory damages, namely past and future wages as equitable relief.*fn2

The Ninth Circuit, following the Supreme Court's guidance, has consistently held that the equitable relief available under ERISA does not include compensatory damages. See McLeod v. Oregon Lithoprint, Inc., 102 F.3d 376, 378 (9th Cir. 1996); Mertens v. Hewitt Associates, 508 U.S. 248, 255--56 (1993). It has extended this holding to back pay specifically. Zavala v. Trans-System, Inc., 258 Fed.Appx. 155, 157 (9th Cir. 2007). But none of the Ninth Circuit (or Supreme Court) cases on the scope of the equitable remedies available under ERISA have involved an alleged wrongful termination under section 510, and there's a plausible argument that back pay is equitable restitution in that context. In fact, the Sixth Circuit has held that it is. Schwartz v. Gregori, 45 F.3d 1017, 1022--23 (6th Cir. 1995).

Stewart argues that the Supreme Court's decision in Great-West kills this argument and effectively overturns Schwartz. The relevant discussion comes in a footnote to the majority's opinion in which Justice Scalia takes on Justice Ginsburg's argument in dissent that all restitution is equitable under section 502(a)(3). Great-West, 534 U.S. at 218 n. 7. Justice Ginsburg noted that back pay is regarded as an equitable remedy for violations of the Civil Rights Act of 1964, and argued that ERISA shouldn't regard it any differently. Justice Scalia's response was that back pay is part of an equitable remedy, but isn't categorically equitable in and of itself, particularly when it is sought as "a freestanding claim for money damages." Id. Great-West certainly doesn't help Blaj, who does not appear to want her job back, but Great-West also wasn't a wrongful termination case. The plaintiff was an insurance company that wanted money back from a beneficiary who had recovered from a third-party tortfeasor. Id. at 207. Still, neither the Supreme Court nor the Ninth Circuit has confronted, head-on, the question whether back pay is available for ERISA plaintiffs who allege that they were wrongfully terminated for exercising their rights under an ERISA plan.

The Tenth Circuit has faced that question, however, and the Court finds its answer - no - persuasive. See Millsap v. McDonnell Douglas Corp., 368 F.3d 1246 (10th Cir. 2004). The plaintiffs in Millsap were workers at a McDonnell Douglas airplane plant in Tulsa, Oklahoma. They alleged that the company closed the plant "to prevent [them] from attaining eligibility for benefits under their pension and health care plans." Id. at 1248. Millsap may not present the exact circumstances of this case - Blaj's claim is that she was fired for seeking benefits, the Millsap plaintiffs' was that they were fired so their employer could avoid paying benefits - but the casesdo implicate the same ERISA provision. See 29 U.S.C. § 1140, supra. The district court certified the following issue for interlocutory review:

[W]hether, in this ERISA § 510 case and as a result of Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, backpay (and, as a result, any other damages based upon backpay) are available as "appropriate equitable relief" to the class members pursuant to ERISA § 502(a)(3).

Millsap, 368 F.3d at 1248. The Tenth Circuit, after a thorough analysis, "easily" concluded that the plaintiffs' freestanding demand for backpay was a demand for compensatory, legal relief. Id. at 1254. As such, it was "accordingly precluded by § 502(a)(3)'s plain terms. If exceptions to those terms are to be made, 'it is for Congress to undertake that task.'" Id. at 1260 (quoting Guidry v. Sheet Metal Workers Nat'l Pension Fund, 493 U.S. 365, 376 (1990)). The Court sees no reason to deviate from the holding of Millsap on the facts of this case, and accordingly ...

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