Complete Versus Conflict Preemption In ERISA Cases

Both state and federal courts have original jurisdiction over ERISA benefits actions. See29 U.S.C. § 1132(e)(1), ERISA § 502(e)(1). But litigants (and defendants in particular) have historically preferred the federal courts, such that the federal courts typically have more experience with, and are better equipped to handle, ERISA's peculiarities. When a claimant sues in state court, however, removal to federal court should not be a forgone conclusion just because ERISA issues may be involved. Because only certain types of cases are subject to removal and because of rigid time and procedural requirements, an analysis of whether to remove a case involving ERISA issues must be prompt and informed. This article provides a reminder and summary of one key consideration—complete versus conflict preemption.

Removal And The Well-Pleaded Complaint Rule

Under the removal statute, "any civil action brought in a State court of which the district courts have original jurisdiction may be removed by the defendant" to federal court. 28 U.S.C. § 1441(a). The "original jurisdiction" referred to is federal question jurisdiction, which covers cases "arising under the Constitution, laws, or treaties of the United States." Id.§ 1331.

Ordinarily, whether a case "arises under" federal law is determined by the "well-pleaded complaint rule." That is, "a defendant may not generally remove a case to federal court unless the plaintiff's complaint establishes that the case 'arises under' federal law." Aetna Health, Inc. v. Davila, 542 U.S. 200, 207 (2004) (quoting Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10 (1983)). "The [well pleaded complaint] rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). Thus, where a plaintiff properly pleads only state law causes of action, there will generally be no federal question jurisdiction. The fact that federal law may provide a defense to a state law claim is insufficient to create federal question jurisdiction, even if the federal defense is anticipated in the plaintiff's complaint. See Gutierrez v. Flores, 543 F.3d 248, 252 (5th Cir.2008); Firstenberg v. City of Santa Fe, N.M., 696 F.3d 1018, 1025 (10th Cir. 2012).

Complete Preemption: A Corollary to the Well-Pleaded Complaint Rule

A corollary or exception to the well-pleaded complaint rule exists "[w]hen a federal statute wholly displaces [a] state-law cause of action through complete pre-emption." Davila, 542 U.S. at 207 (quoting Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003)). Under the complete-preemption doctrine, a select collection of claims, regardless of how they are pled, are "necessarily federal" and removable to federal court. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 64-65 (1987). For these claims, federal law does not simply preempt state law—it replaces it. One court explained that "[p]reemption is what wipes out the state law, but the foundation of removal [under complete preemption] is the creation of federal law to replace state law." Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1075 (7th Cir. 1992); see also Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009) (complete preemption displaces state law claims and substitutes a federal claim). Therefore, where a plaintiff's state-law cause of action is removed on the basis of complete preemption, the federal court will "re-characterize" the claim as a federal claim, thereby making the claim "arise under" federal law. Cavallaro v. UMass Mem'l Healthcare, Inc., 678 F.3d 1, *4 (1st Cir. 2012).

In its true sense, complete preemption is a "misnomer, having nothing to do with preemption and everything to do with federal occupation of a field." Lehmann v. Brown, 230 F.3d 916, 919 (7th Cir. 2000). It is a jurisdictional doctrine, distinct from "ordinary," "conflict," or "defense" preemption. As the Tenth Circuit explained, complete preemption is not "a crude measure of the breadth of the preemption (in the ordinary sense) of a state law by a federal law, but rather as a description of the specific situation in which a federal law not only preempts a state law to some degree but also...