ERISA-Second Circuit Rules That Plaintiff’s Claim Is Preempted By ERISA, Since It Arises Out Of A Pension Plan And Not A Separate Employment Agreement

In Arditi v. Lighthouse International, No. 11-423-cv (2nd Cir. 2012), the district court found that the claims of the plaintiff, Aries Arditi (“Arditi”), against the defendant, Lighthouse International (“Lighthouse”), were preempted by ERISA, since they arose under Lighthouse’s Pension Plan (the “Plan”) and not separately and independently out of Arditi’s written employment agreement (the “Agreement”). The district court denied Arditi’s motion to remand the case to state court, holding that Arditi’s claims were preempted by ERISA and that his suit was therefore properly removed to federal court. The district court then dismissed the action for failure to state a claim. The question for the Second Circuit Court of Appeals (the “Court”): should Arditi’s claims be preempted by ERISA?

In this case, from 1982 to 2000, Arditi was employed by Lighthouse as a “vision scientist.” In 2000, Arditi left Lighthouse, accepting employment elsewhere. After his departure, Lighthouse amended the Plan, adding a “Rule of 85.” This rule entitled any qualified employee to retire and collect his or her (unreduced) pension benefits before the age of 65, if the sum of the employee’s age and years of vested service were equal to or greater than 85. On July 1, 2002, Arditi returned to Lighthouse, in part to take advantage of the Rule of 85 amendment. The Agreement, which was dated June 13, 2002 and signed by both parties, permitted Arditi to retire, when the sum of his age and years of vested service (including pre-2001 service) were at least 85 and receive the unreduced pension benefits under the Plan. However, on June 30, 2007, before Arditi’s age and years of vested service reached 85, the Plan was frozen. The freeze stopped the accrual of service for all Plan members. Arditi ultimately retired on March 19, 2010. Due to the freeze, Arditi did not qualify for the unreduced pension benefits. Aditi filed suit against Lighthouse in state court, seeking a declaratory judgment and asserting two causes of action for breach of the Agreement. The suit was removed to the district court.

In analyzing the case, the Court noted that section 514 of ERISA contains broad preemption provisions. It provides that ERISA shall “supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” According to the Supreme Court (see Aetna Health Inc. v. Davila, 542 U.S. 200 (2004)), ERISA preempts a claim where: (1) an individual, at some point in time, could have brought his or her claim under ERISA section 502(a)(1)(B) (authorizing a plan member to bring suit for benefits due) and (2) no other independent legal duty is implicated by a defendant’s actions. Here, prong (1) is met, because Arditi could have brought his claims under ERISA. He is the type of party who can bring an ERISA claim, since he is a participant in, and is seeking benefits under, the Plan (specifically, under the Rule of 85 provision). Arditi’s claims seek enforcement of specific provisions of the Plan, and can be construed as colorable claims for benefits. Prong (2) is also satisfied because no other independent legal duty is implicated by Lighthouse’s actions. Lighthouse’s obligations under the Plan are inextricably intertwined with the interpretation of Plan coverage and benefits and do not create a sufficiently independent duty. This obtains even though Arditi signed the Agreement. The Agreement did not establish a separate and independent promise; rather, Arditi’s claims derived directly from the Plan.

As such, the Court concluded that Arditi’s claims were preempted by ERISA, and upheld the district court’s dismissal of his case.

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