ERISA-Seventh Circuit Rules That ERISA Completely Preempts The Plaintiff’s State Law Claim That The Employer Failed To Pay Her Money Under Its Paid Days Leave Policy

In Studer v. Katherine Shaw Bethea Hospital, No. 16-3728 (7th Cir. 2017), Katherine Shaw Bethea  Hospital  is a not-for-profit healthcare provider in Dixon, Illinois. Heather Studer worked at the hospital as an occupational therapist until she resigned. After she resigned, she filed a small-claims complaint in Illinois state court, alleging that the hospital violated certain provisions of the Illinois Wage Payment and Collection Act (“IWPCA”) by failing to pay her money that she had accrued under the hospital ‘s Paid Days Leave policy. The hospital removed the suit to federal court, claiming that Studer’s claim was completely preempted by ERISA.

Studer then filed a motion to remand her suit to state court, challenging the hospital’s preemption claim and asserting that the district court did not have jurisdiction over her state-law claim; the hospital  filed a motion for summary judgment. The district court denied Studer’s  motion to remand, holding that it had federal-question jurisdiction because ERISA completely preempted the state-law claim. The court then granted the hospital’s motion for summary judgment, holding that Studer had failed to name the welfare benefit plan as a defendant, which ERISA requires in most instances. In granting the motion, the court permitted  Studer to file an amended complaint naming the appropriate defendant and to issue summons.

But instead of filing an amended complaint, Studer filed a Rule 59(e) motion to alter or amend the judgment, again arguing that ERISA did not completely preempt her claim. The district court denied that motion, and this appeal followed. On appeal, Studer again contends that her IWPCA claim was not completely preempted by ERISA. The Seventh Circuit Court of Appeals agreed with the district court, that ERISA completely completely preempted the claim with its expansive preemptive power, and affirmed the district court’s ruling.


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