The full case caption appears at the
end of this opinion. COX, Circuit Judge: Annette Butero, Simply Fashion Stores, Ltd., and its general partner SimplyFashion Stores, Inc. appeal two district court orders: one refusing to remand to statecourt their claims against Royal Maccabees Life Insurance Company and its employeeAnita Lawson, and another dismissing their complaint in its entirety. We affirm.
I. Background Simply Fashion provides its employees a cafeteria plan that makes availablehealth, life, and long-term disability insurance, as well as a 401(k) retirement savingsplan. In early 1996, Simply Fashion learned that its life-insurance carrier would cancelthe group policy that Simply Fashion offered to its employees. Simply Fashion’shuman resource director met with an independent insurance agent, who notified SimplyFashion that Royal Maccabees would provide Simply Fashion a replacement policy atthe same premium as the prior insurer. According to the agent, the replacement policywould have a portability feature. Based on this information, Simply Fashion issued a memorandum to its full-timeemployees. The memo announced that “our life insurance coverage” would beprovided by a new carrier starting on a certain date, and that employees insured by theold carrier would be automatically “enrolled.” (Supp. R.-25 Ex. 6.) Employees wouldpay the entire premium by payroll deduction, as they had in the past. Full-timeemployees with 90 days’ tenure who were not enrolled under the old policy wereinvited to enroll. The attached “Special Open Enrollment” form under the “SimplyFashion Stores, Ltd. Cafeteria Plan” required employees to acknowledge that they hadreceived a “Summary Plan Description.” (
Id.) That summary plan description, alsoattached to the memo, identified the benefits provided under the life-insurance policy($50,000) and who was eligible (full-time employees with 90 days’ tenure). Theenrollment form also warned employees that “[t]he Plan Administrator may reduce orcancel my compensation reduction or otherwise modify this agreement in the event hebelieves it advisable in order to satisfy certain provisions of the Internal RevenueCode.” (
Id. Ex. 5.) The form contained a signature space at the bottom to indicate thatthe enrollment was “[a]ccepted and agreed to by the Company’s AuthorizedRepresentative.” (
Id.) As it turned out, Royal Maccabees would not provide a portable policy to SimplyFashion at the same premium as the old policy. Despite its representations to itsemployees, Simply Fashion opted for a cheaper, nonportable policy. Although,according to the insurance agent and the Complaint, “other insurance companiesoffering coverage could have been purchased by Simply Fashions,” (Supp. R.-25 Ex.4), Simply Fashion stayed with Royal Maccabees. The Royal Maccabees policy that Simply Fashion procured was one that wasissued to Simply Fashion, and not to Simply Fashion’s employees. Royal Maccabeesadvised Simply Fashion on administration of the policy and on premium billing. SimplyFashion was also responsible for providing Royal Maccabees with documentationsupporting a claim. Simply Fashion began collecting premiums from its employees, andit remitted two premium checks to Royal Maccabees. After the policy’s putative effective date, Royal Maccabees asked SimplyFashion to provide a “statement from the company that there had been no deaths ordisabilities since the effective date.” (Supp. R.-25 Ex. 4.) Over a month later, SimplyFashion did so, after a fashion: it informed Royal Maccabees that from the effectivedate of the policy to the day before the letter’s date, “we have had no death claims.” (
Id. Ex. 7.) The letter said nothing about disability. This omission was arguablyimportant, because a month earlier one of Simply Fashion’s warehouse managers,Benedict Butero, had taken leave due to a severe illness. Butero had beenautomatically enrolled for the insurance because he had elected to purchase the lifeinsurance that Simply Fashion had previously offered. The day after Simply Fashioninformed Royal Maccabees that there were no outstanding death claims, Butero died. The day Butero died, Royal Maccabees sent Simply Fashion a letter stating thatRoyal Maccabees was “declin[ing] your request for coverage” and that “[n]o contractof insurance exists.” (Supp. R.-25 Ex. 8.) The letter was accompanied by a checkreimbursing Simply Fashion for the paid premiums. The letter did not explain whyRoyal Maccabees rejected the policy application, although Royal Maccabees nowargues that it was because Simply Fashion provided no information about disabledemployees. A few days later, Annette Butero, Benedict’s wife, made a claim for benefitsthrough Simply Fashion. The claim was denied. This lawsuit followed. Butero, joined by Simply Fashion, sued in state court, naming as defendantsRoyal Maccabees, its employee Anita Lawson, and the independent insurance agent. The complaint — a classic “shotgun” pleading — joins every defendant in everycount, and it seeks unspecified compensatory damages for breach of contract, bad faithrefusal to pay, and fraud in the inducement; it also includes three counts alleging fraudthat are apparently duplicative. The defendants removed the action to federal court,asserting that the insurance policy was part of a plan governed by the EmployeeRetirement Income Security Act of 1974. The plaintiffs then moved to remand, arguing that the insurance policy was notpart of an ERISA plan, and in the alternative that the claims against the insurance agentwere not preempted by ERISA. The court apparently rejected the first argument, butagreed with the second: the claims against the independent insurance agent weresevered and remanded. The court otherwise denied the motion to remand. The remaining defendants, Royal Maccabees and Anita Lawson, then moved tostrike the plaintiffs’ state-law claims. Royal Maccabees argued that ERISA governedthe insurance policy, and that all the remaining state-law claims were preempted. Thedistrict court agreed. It issued a one-page order dismissing the complaint withoutprejudice to the right to refile a complaint stating claims under ERISA. The plaintiffs appeal and challenge the district court’s orders on two grounds. First, they argue that the insurance policy is not part of an ERISA plan because it isanchored in a regulatory safe harbor from ERISA for certain “group or group-typeinsurance program[s].” 29 C.F.R. � 2510.3-1(j). Second, they contend that even if thepolicy is part of an ERISA plan, their causes of action are not preempted under theprinciples enunciated in
Morstein v. National Ins. Servs., Inc., 93 F.3d 715, 722 (11thCir. 1996) (en banc). We review de novo both the denial of the motion to remand andthe dismissal.
See Whitt v. Sherman Int’l Corp., 147 F.3d 1325, 1329 (11th Cir. 1998);
Hall v. Blue Cross/Blue Shield, 134 F.3d 1063, 1064-65 (11th Cir. 1998).
II. Discussion Reviewing the two district court orders at issue here requires juggling twodifferent kinds of ERISA preemption. The first kind is what this circuit has calledcomplete preemption or “super preemption.”
Whitt v. Sherman Int’l Corp., 147 F.3d1325, 1329 (11th Cir. 1998). Superpreemption arises from Congress’s creation of acomprehensive remedial scheme in 29 U.S.C. � 1132 for loss or denial of employeebenefits.
See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S. Ct.1542, 1546 (1987). When Congress comprehensively occupies a field of law, “anycivil complaint raising this select group of claims is necessarily federal in character”and thus furnishes subject-matter jurisdiction under 28 U.S.C. � 1331.
Id. Therefore,federal courts have subject-matter jurisdiction over state-law claims that have beensuperpreempted, and defendants may remove to federal court those actions that containsuch claims.
See id. There being no other basis for subject-matter jurisdiction here,whether the district court properly denied the motion to remand for lack of removaljurisdiction thus turns on whether some or all of the state-law claims aresuperpreempted. The second kind of preemption we will call “defensive.” It originates inERISA’s express preemption provision, 29 U.S.C. � 1144(a).
[FOOTNOTE 1] Defensive preemptionprovides only an affirmative defense to certain state-law claims.
See id. As anaffirmative defense, defensive preemption does not furnish federal subject-matterjurisdiction under 28 U.S.C. � 1331; “a cause of action arises under federal law onlywhen the plaintiff’s well-pleaded complaint raises issues of federal law.”
Id. at 63, 107S. Ct. at 1546. On the other hand, defensive preemption does require dismissal ofstate-law claims.
See id. Reviewing the district court’s dismissal of the complainttherefore raises only the question of whether the state-law claims were subject to
defensive preemption. We start with the superpreemption issue because, for the reasons explainedabove, it ultimately decides the existence of federal subject-matter jurisdiction. As itturns out, some claims are superpreempted, and others are not. Here’s the rule: ERISA superpreemption exists only when the “plaintiff is seeking relief that is availableunder 29 U.S.C. � 1132(a).”
Whitt, 147 F.3d at 1330. Regardless of the merits of theplaintiff’s actual claims (recast as ERISA claims), relief is available, and there iscomplete preemption, when four elements are satisfied. First, there must be a relevantERISA plan.
See id.;
Kemp v. International Business Machs. Corp., 109 F.3d 708,713 (11th Cir. 1997). Second, the plaintiff must have standing to sue under that plan.
See Engelhardt v. Paul Revere Life Ins. Co., 139 F.3d 1346, 1350 n.3 (11th Cir. 1998). Third, the defendant must be an ERISA entity.
See id.;
Franklin v. QHG of Gadsden,Inc., 127 F.3d 1024, 1029 (11th Cir. 1997);
see also Morstein v. National Ins. Servs.,Inc., 93 F.3d 715, 722 (11th Cir. 1996) (en banc) (no preemption at all — not evendefensive preemption — when the defendant is “a non-ERISA entity” and the claimsdo not “affect relations among principal ERISA entities as such”). Finally, thecomplaint must seek compensatory relief akin to that available under � 1132(a); oftenthis will be a claim for benefits due under a plan.
See Engelhardt, 139 F.3d at 1354;
Franklin, 127 F.3d at 1029. The claims in this complaint that are not superpreempted are those brought bySimply Fashion. The second element, standing to sue under ERISA, is missing: Simply Fashion’s role on ERISA’s stage is “employer.”
See 29 U.S.C. � 1002(5). Section 1132(a) grants employers no cause of action for damages.
See 29 U.S.C. �1132(a). Simply Fashion thus has no standing to assert a statutory cause of action.
SeeEngelhardt, 139 F.3d at 1351. Hence, Simply Fashion’s claims are notsuperpreempted. Butero’s claims, on the other hand, are superpreempted. To begin with, thesecond, third, and fourth elements are plainly present. First, if the life insurance policyis part of an ERISA plan (more on that below), then she is a potential beneficiary.
See29 U.S.C. � 1002(8) (“‘[B]eneficiary’ means a person designated by a participant . .. who is or may become entitled to a benefit thereunder.”). She thus has standing toassert a variety of claims under � 1132(a).
See 29 U.S.C. � 1132(a)(1), (2), (3), (4);
Engelhardt, 139 F.2d at 1351. Second, if we have an ERISA plan, Royal Maccabees
[FOOTNOTE 2] is an ERISA entity. It could “control . . . the payment of benefits” and the”determination of [Butero's] rights” under any plan we may have here.
[FOOTNOTE 3] Morstein, 93F.3d at 723. Third, the damages apparently sought here are available under � 1132: wehave held that claims against an insurer for fraud and fraud in the inducement topurchase a policy are in essence claims “to recover benefits due to [the beneficiary]under the terms of the plan.” 29 U.S.C. � 1132(a)(1)(B);
see Engelhardt, 139 F.3d at1353 (fraud in the inducement is claim for benefits under � 1132(a)(1));
Franklin, 127F.3d at 1029 (claim based on alleged misrepresentation that certain coverage wouldexist is claim for benefits). And the claims here of bad faith refusal to pay and breachof contract both pursue the same relief as the fraud claims — payment of the lifeinsurance benefit.
Cf. Engelhardt, 139 F.3d at 1354. We therefore conclude that allof Butero’s claims are properly recast as claims for benefits due under any plan. That leaves only the first element to discuss — whether there is a relevantERISA plan. The centerpiece of the plaintiffs’ argument on this point is a regulatorysafe harbor from “plan-ness,” 29 C.F.R. � 2510.3-1(j), and it is there that we start. Theregulation excepts from the definition of “employee welfare benefit plan” certain”group or group-type insurance program[s]” “ offered by an insurer to employees.” 29C.F.R. � 2510.3-1(j). For the program to qualify for the exception, four elements mustbe satisfied: (1) No contributions are made by an employer or employee organization; (2) Participation [in] the program is completely voluntary for employees. . . ; (3) The sole functions of the employer . . . with respect to the programare, without endorsing the program, to permit the insurer to publicize theprogram to employees or members, to collect premiums through payrolldeductions or dues checkoffs and to remit them to the insurer; and (4) The employer . . . receives no consideration in the form of cash orotherwise in connection with the program . . . .
Id. There is no dispute here that elements (1), (2), and (4) are fulfilled. Element (3)is in dispute, but it is hard to see why. The regulation explicitly obliges the employerwho seeks its safe harbor to refrain from
any functions other than permitting the insurerto publicize the program and collecting premiums. Simply Fashion did a lot more. Itpicked the insurer;
[FOOTNOTE 4] it decided on key terms, such as portability and the amount ofcoverage; it deemed certain employees ineligible to participate; it incorporated thepolicy terms into the self-described summary plan description for its cafeteria plan; andit retained the power to alter compensation reduction for tax purposes. So the safeharbor is barred. But that does not necessarily mean that the insurance policy is partof an ERISA plan.
See, e.g.,
Brundage-Peterson v. Compcare Health Servs. Ins.Corp., 877 F.2d 509, 511 (7th Cir. 1989). So we turn next to the high-seas definitionof an “employee welfare benefit plan” to see if the insurance policy here qualifies. For present purposes, an “employee welfare benefit plan” governed by ERISAis any (1) “plan, fund or program,” (2) established or maintained (3) by an employer,(4) to provide beneficiaries (5) death benefits through an insurance policy. 29 U.S.C.��1002(1);
see also Donovan v. Dillingham, 688 F.2d 1367, 1371 (11th Cir. 1982) (enbanc) (breaking up the statutory definition into elements). Elements (3), (4) and (5)are undisputedly satisfied. We conclude that the other two elements are satisfied, aswell. First, we have a “plan.” An ERISA plan exists whenever there are “intendedbenefits, intended beneficiaries, a source of financing, and a procedure to apply for andcollect benefits.”
Donovan, 688 F.2d at 1372. The intended benefits here were thosepaid if an employee dies. The intended beneficiaries were those named by theemployee. Financing was provided by the employee through payroll deductions. Anda “reasonable person” could figure out procedures for receiving benefits (certainlyButero did here, for Simply Fashion filed an insurance claim on her behalf).
See id. at1373. Second, the plan was “established or maintained.” A plan is “established” whenthere has been some degree of implementation by the employer going beyond a mereintent to confer a benefit.
See Whitt, 147 F.3d at 1331;
Donovan, 688 F.3d at 1373(“Acts or events that record, exemplify or implement the decision will be direct orcircumstantial evidence that the decision has become reality–
e.g., financing orarranging to finance or fund the intended benefits, establishing a procedure fordisbursing benefits, assuring employees that the plan or program exists–but it is thereality of a plan . . . and not the decision to extend certain benefits that isdeterminative.”). Such implementation happened here. Simply Fashion consulted aninsurance agent, selected the terms of the group policy it wished to purchase for itsemployees, completed an application form for the policy, solicited enrollments from itsemployees, collected money through payroll deductions, and remitted premium checksto Royal Maccabees. These actions on Simply Fashion’s part take the implementationof its plan sufficiently beyond that in cases where no establishment occurred.
Compare Whitt, 147 F.3d at 1331 (asserted “plan” was no more than several draft plans),
with Kenney v. Roland Parson Contracting Corp., 28 F.3d 1254, 1258 (D. C. Cir. 1994)(“plan” “established” when employer represented to employees that contributions werebeing made to pension fund, and plan documents were prepared, even though nocontributions were ever made). One might argue, on the other hand, that Royal Maccabees’ retroactive refusalto issue the policy precludes any plan from being “established.” We reject thisargument for two reasons.
[FOOTNOTE 5] First, whether a plan is “established” is determined by the
employer’s conduct, not that of any other ERISA entity. The statutory definition makesit clear that only an employer can establish an “employee welfare benefit plan,”
see 29U.S.C. � 1002(1), and caselaw glosses on the definition have likewise focused on theemployer’s actions.
See Kenney, 28 F.3d at 1258 (describing seven-factor test forestablishment, including: (1) the employer’s representations in internally distributeddocuments; (2) the employer’s oral representations; (3) the employer’s establishmentof a fund to pay benefits; (4) actual payment of benefits; (5) the employer’s deliberatefailure to correct known perceptions of a plan’s existence; (6) the reasonableunderstanding of employees; and (7) the employer’s intent);
Henglein v. Informal Planfor Plant Shutdown Benefits for Salaried Employees, 974 F.2d 391, 400 (3d Cir.1992);
see also Donovan, 688 F.3d at 1367. Second, the facts-and-circumstancesstandard for whether a plan has been “established” has many factors other thanpayment of actual benefits. Thus, the facts that an employer represented to employeesthat life insurance was available, took payroll deductions to pay premiums, in fact paidpremiums, and obviously intended for life insurance to take effect can trump theunderwriter’s rejection of an application nearly two months after coverage putativelybegan. For these reasons, we conclude that the insurance policy was part of an”employee welfare benefit plan” governed by ERISA. That means that we have arelevant ERISA plan, and that all the elements of superpreemption are satisfied forButero’s claims. So we conclude that all of Simply Fashion’s claims escape superpreemption,while Butero’s claims fall to it. The upshot of this conclusion is that the district courtproperly denied the motion to remand. Removal jurisdiction exists over the action byvirtue of the superpreemption of Butero’s claims. Because Simply Fashion’s claimswere joined with superpreempted (and therefore removable) claims, furthermore, thedistrict court could properly retain jurisdiction over them.
See 28 U.S.C. � 1441(c);
seeIn re City of Mobile, 75 F.3d 605, 608 (11th Cir. 1996). The question of the court’sjurisdiction thus resolved, we turn to whether the district court properly dismissed theplaintiffs’ claims as defensively preempted. Defensive preemption defeats claims that seek relief under state-law causes ofaction that “relate to” an ERISA plan. 29 U.S.C. � 1144(a);
Lordmann Enters. v.Equicor, Inc., 32 F.3d 1529, 1532 (11th Cir. 1994). It has long been settled that claimssuch as Simply Fashion’s “relate to” an ERISA plan.
See Pilot Life Ins. Co. v.Dedeaux, 481 U.S. 41, 47-48, 107 S. Ct. 1549, 1553 (1987) (state-law bad faith,breach of contract, and fraud claims are all preempted under � 1144(a)). Butero’sclaims are defensively preempted, as well: If the plaintiff’s claims are superpreempted,then they are also defensively preempted.
See McClelland v. Gronwaldt, 155 F.3d507, 517 (5th Cir. 1998). The district court thus properly dismissed both plaintiffs’claims with leave to refile.
III. Conclusion For the foregoing reasons, we affirm the district court’s orders. AFFIRMED. :::FOOTNOTES:::
FN1 “[T]he provisions of this subchapter and subchapter III of this chapter shallsupersede any and all State laws insofar as they may now or hereafter relate to any employeebenefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of thistitle.” 29 U.S.C. � 1144(a).
FN2As we mentioned earlier, the plaintiffs sued both Royal Maccabees and one of itsemployees, Anita Lawson. Arguably, the claims against Anita Lawson would not besuperpreempted because of element three of our four-part test: Lawson is probably not an ERISAentity. We have found no authority on this precise question, and the parties have cited none –the parties in fact ignore that Lawson has been sued at all. (There are cases concerning
independent insurance agents, but not mere employees of insurance companies.) But we declineto hold that claims against an ERISA entity’s employee escape the preemption that would doomstate-law claims against the entity itself. Such a holding would reduce all of ERISA’s preemptivescope to nothing but a trap for an artless pleader.
FN3We note that
Franklin suggests in dicta (since the issue was not before it) that aninsurance company allegedly obligated to pay benefits under a plan is not considered an ERISAentity if the complaint alleges pre-policy fraud.
See Franklin, 127 F.3d at 1029. No one hasargued that this dictum governs this case, and we doubt that ERISA status can be so cleanlyswitched on and off. After all, we aren’t here today solely because of any fraud; we’re herebecause Butero thinks she is due benefits under an ERISA plan. The benefits were denied by theinsurer in its status as an ERISA entity.
FN4We do not hold here, because the question is not presented, that picking an insurerby itself could move an employer out of the safe harbor.
FN5 Our explicit conclusion here was reached implicitly by the panel in
Willett v. BlueCross & Blue Shield, 953 F.2d 1335 (11th Cir. 1992). The
Willett plaintiffs were putativebeneficiaries of a health insurance policy that the insurer retroactively canceled as of its effectivedate, thus leaving the plaintiffs uncovered for care they had received during the time the policyhad purported to be in effect. The plaintiffs sued the insurer for benefits. Not only did this court
not hold that the ineffectiveness of the policy took it outside ERISA; it also held that the plaintiffshad a potential claim against the insurer notwithstanding the cancellation of the policy.
See id. at1342-43.
ANNETTE BUTERO, SIMPLY FASHION STORES INC., et al., Plaintiffs-Appellants, v. ROYAL MACCABEES LIFE INSURANCE COMPANY, a corporation, ANITA LAWSON, Defendants-Appellees. No. 97-6536 In The United States Court Of Appeals For The Eleventh Circuit Appeal from the United States District Court for the Northern District of Alabama D. C. Docket No. CV 97-L-328-S May 10, 1999 Before COX and BIRCH, Circuit Judges and GODBOLD, Senior Circuit Judge.
