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24965 - Lewis v. Int'l Brotherhood of Electrical Workers

Shearouse Adv. Sh. No. 23
S.E. 2d

THE STATE OF SOUTH CAROLINA

In The Supreme Court

Michael O. Lewis, As

Personal Representative

of the Estate of N.G.

Lewis, Deceased, Petitioner,

v.

Local 382, International

Brotherhood of Electrical

Workers (AFL-CIO),

Davis Self, Larry Poole,

Jerome Jenkins, Doris

M. Jones, Bill Davis,

John C. Davis and

Ronald Goodale, Defendants,

Of Whom Local 382,

International

Brotherhood of Electrical

Workers (AFL-CIO) is, Respondent



ON WRIT OF CERTIORARI TO THE COURT OF

APPEALS



Appeal From Lexington County

William P. Keesley, Circuit Court Judge

Opinion No. 24965

Heard December 15, 199,8 - Filed July 12, 1999

p.6


Lewis v. Int'l Brotherhood of Electrical Workers





AFFIRMED IN RESULT



Henry Hammer and Howard Hammer, of Hammer,

Hammer, Carrigg & Potterfield, of Columbia, and Scott

Elliott, of Elliott and Elliott, of Columbia, for petitioner.



Herbert Buhl, III, of Columbia, and Terry R. Yellig, of

Sherman, Dunn, Cohen, Leifer, & Yellig, of Washington,

D.C., for respondent.



WALLER, A.J.: We granted certiorari to review the Court of Appeals'

opinion in Lewis v. Int'l Brotherhood of Electrical Workers, 324 S.C. 412, 481

S.E.2d 135 (Ct. App. 1997). We affirm in result.







FACTS1



Lewis, an electrician,2 was a member of the International Brotherhood of

Electrical Workers (IBEW), Local #382, for approximately 30 years. In 1987,

his membership in the union lapsed when he continued to work for an employer

which had been declared "in difficulty" by the IBEW.3 In February, 1988, the

IBEW informed Lewis he was ineligible to receive retirement benefits from the

IBEW Pension Benefit Fund because he was no longer a member in good

standing.4 Lewis brought this action seeking damages for violation of the South

Carolina Right-to-Work Act, S.C.Code Ann. §§ 41-7-10 through -90 (Rev. 1986


1The reader is directed to the Court of Appeals' opinion for a more

complete recitation of the facts.





2Lewis died in 1990; his son Michael has been substituted as plaintiff.





3 IBEW's Constitution prohibits members from "[w1orking for any ...

company declared in difficulty" with the union. Art. VII, § 11.





4Article XII, Section 1(a)(1) of Union's constitution provides for pension

benefits to "A" members of the IBEW who are in "continuous good standing with

twenty (20) or more years immediately preceding his application, who has

attained the age of sixty-five (65) years."

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Lewis v. Int'l Brotherhood of Electrical Workers





& Supp. 1997).5 The jury returned a verdict in favor of Lewis against the union

and awarded $82,560.00 in actual damages and $25,000 in punitive damages.

In a well reasoned opinion, Judge Anderson, writing for a majority of the Court

of Appeals, held Lewis'claims were preempted by federal law. We agree and,

accordingly, affirm in result.6





ISSUES



1. Is the federal court's order remanding to state court, preclusive

on the preemption issue?



2. Is Lewis' claim preempted under 28 U.S.C. § 185 of the Labor

Management Relations Act (LMRA)?



3. Should the Court of Appeals have addressed Lewis' claim under

the South Carolina Right-To-Work Act?



4. Is Lewis' claim preempted under § 514(a) of the Employee

Retirement Income Security Act (ERISA), 29 U.S.C.§ 1144(a)?





1. PRECLUSION



We concur in the Court of Appeals'holding that the federal court's order

remanding to state court is not preclusive on the issue of preemption.7





As noted by the Court of Appeals, the Fourth Circuit has specifically held

a district court's findings incident to an order of remand have no preclusive

effect. Nutter v. Monongahela, 4 F.3d 319 (4th Cir. 1993)(district court's

holding that ERISA and LMRA did not preempt plaintiff s state-law claims did




5He also filed a claim for outrage; the jury returned a verdict for the

defendants on this claim.





6Except as otherwise noted herein, we agree with and adopt the reasoning

set forth in the Court of Appeals' opinion. Readers are referred to that opinion

for a more detailed and thorough discussion of the issues.





7Lewis initially filed this action in state court, and the matter was

removed to federal court by the IBEW.. In response to Lewis' motion, the

district court remanded to state court, finding removal had been improvident.

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Lewis v. Int'l Brotherhood of Electrical Workers





not prevent defendant from raising preemption as a defense in state court).8

Accordingly, the Court of Appeals properly held the federal court's remand

order was not preclusive. Accord Nichols v. Amalgamated Clothing, 305 S.C.

323~ 408 S.E.2d 237 (1991)(addressing merits of preemption issue after remand

from federal court).







2. PREEMPTION UNDER LMRA





If a state-law cause of action does not exist independently of a labor

contract, it is pre-empted by Section 301 of the Labor Management Relations

Act ( LMRA). Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85

L.Ed.2d 206 (1985); Nash v. AT & T Nassau Metals, 298 S.C. 428, 381 S.E.2d

206 (1989); Butts v. AVX Corp., 292 S.C. 256, 355 S.E.2d 876 (Ct.App.1987).

In Nash v. AT & T Nassau Metals, 381 S.E.2d 206, 208, 298 S.C. 428 (1989), we

stated:

This test is one of whether the state claim exists independently of

the collective bargaining agreement or whether it is "inextricably

intertwined" with a consideratio n of the terms of the agreement.

If the state claim does not exist independently of the agreement, it

is preempted by federal law.

The Court of Appeals found Lewis' claim was substantially dependent

upon an analysis of the IBEW constitution because interpretation of the

constitution was essential to a determination of whether Lewis had any

property rights in the pension benefit fund. We agree.





Lewis' tort claim intrinsically relates to the nature of the IBEW

constitution. His complaint states that the IBEW, "in violation of the Right-To-




8The rationale for holding a district court's remand order has no

preclusive effect on the issue of preemption is that such remand orders are not

subject to appellate review under 28 U.S.C. § 1447(d). Since Nutter, the United

States Supreme Court decided Quackenbush v. Allstate Ins. Co., 517 U.S. 706,

116 S.Ct. 1712,135 L.Ed. 2d 1 (1996) in which it held a remand order which is

not based upon either subject matter jurisdiction or defects in the removal

procedure (i.e., pursuant to §1447(d)), is subject to appellate review such that

it may be given preclusive effect. (Quackenbush involved a remand based on

abstention principles). Here, it is impossible to determine for certain the basis

of the federal court's remand order as it merely states removal was improvident.

Accordingly, we decline to give it preclusive effect.

p.9


Lewis v. Int'l Brotherhood of Electrical Workers





Work Act, attempted to interfere with [Lewis'] exercise of his Right-To-Work

and did, thereby cause him to lose his pension benefits," and that as a result

Lewis "has suffered the loss of his pension benefits." It is impossible to

ascertain, without reference to IBEW's constitution, whether the union acted

properly in denying Lewis his pension benefits. Accordingly, we concur with the

Court of Appeals' analysis that resolution of the case was "substantially

dependent" upon the union's constitution so as to be preempted under the

LMRA.9







Finally, Lewis relies on this Court's opinion in Layne v. Int'l Brotherhood

of Elec. Workers, 271 S.C. 3462 247 S.E.2d 346 (1978), in which we held, under

similar facts, the plaintiffs state law claim under the Right-To-Work Act was

not preempted by the Labor-Management Reporting and Disclosure Act of 1959

(LMRDA), 29 U.S.C. s 411 et seq. Layne dealt with Section 413 of the LMRDA

which specifically states, "Nothing contained in this subchapter ( 29 U.S.C. §§

411- 415) shall limit the rights and remedies of any member of a labor

organization under any State or Federal law or before any court or other

tribunal, or under the constitution and bylaws of any labor organization."




9We agree with the Court of Appeals that our holding in Nichols v.

Amalgamated Clothing and Textile Workers Union, AFL-CIO, CLC, 305 S.C.

323~ 408 S.E.2d 237 (1991) is not controlling. The United States Supreme

Court, in Wooddell v. International Brotherhood of Elec. Workers Local 71, 502

U.S. 931 112 S.Ct. 494~ 116 L.Ed.2d 419 (1991), extended the preemption

provision of the LRMA to union constitutions. Nichols specifically held the

employee's complaint was not preempted because the circuit court needed only

to focus upon ACTWU's constitution, by-laws, and prior practices.

Accordingly, to the extent Nichols conflicts with Wooddell, it is overruled.





We likewise agree with the Court of Appeals' analysis regarding this

Court's opinion in Kimbrell v. Jolog Sportswear, Inc., 239 S.C. 415~ 123 S.E.2d

524 (1962), in which we held an action for wages under this state's statutory

law was not preempted by the NLRA. In Kimbrell, there was no conflict with

federal jurisdiction and the National Labor Relations Act afforded no remedy

to plaintiffs for the wrongs done them. Here, there is a conflict with federal

jurisdiction, inasmuch as the Court would be required to interpret the union's

constitution. Moreover, in the present case, counsel for the IBEW advised the

Court at oral argument that Lewis may file a claim for unfair labor practices

with the National Labor Relations Board, or may have a claim for unfair labor

practices under section 301 of the LMRA. Accordingly, unlike the plaintiff in

Kimbrell, Lewis is not without a remedy.

p.10


Lewis v. Int'l Brotherhood of Electrical Workers





However, Section 413 of the LMRDA limits its application to that subchapter

of the LMRDA.10Section 413 of the LMRDA does not apply to Section 301 of

the LMRA. To hold otherwise would completely eviscerate the preemption

provisions of Section 301 of the LMRA.11





3. PREEMPTION UNDER ERISA





Finally, a majority of the Court of Appeals held Lewis' claim was

preempted by Section 514(a) of ERISA as his claim for damages "related to" an

employee benefit plan within the scope of ERISA's preemption clause.12It held

the resolution of Lewis' claim directly affected the pension fund as it

"potentially alters the criteria for receipt of benefits." 481 S.E.2d at 142. We

agree.





Any and all State laws insofar as they relate to employee benefit plans

are preempted by ERISA. 29 U.S.C. § 1144(a); Duncan v. Provident Mut. Life

Ins. Co. of Philadelphia, 310 S.C. 4652 427 S.E.2d 657 (1993). This Court has

recognized that the pre-emptive effect of ERISA is a broad one. Baker Hosp. v.

Isaac, 301 S.C. 248, 391 S.E.2d 549 (1990). A state law "relates to" an

ERISA-governed employee benefit plan, "if it has a connection with or reference

to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890,

2896, 77 L.Ed.2d 490 (1983). Further, a state law "relates to" an ERISA plan if

the rights or restrictions it creates are predicated on the existence of such a

plan. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112

L.Ed.2d474(1990). However, those state actions which affect employee benefit

plans in "too tenuous, remote or peripheral a manner" do not relate to the plan.

Shaw v. Delta Air Lines, supra.


10The subchapter of the LMRDA in question, § 411(a)(5) deals with due

process measures a union member must be afforded prior to being disciplined.

As we read Section 413, it was intended to permit union members the

procedural due process afforded by state law if it was greater than that

permitted by Section 411.





11 Moreover, the issue of Section 301 preemption was not raised in Layne.

This Court will not generally raise issues sua sponte. Smith v. Phillips, 318 S.C.

453, 458 S.E.2d 427 (1995)(but for very few exceptional circumstances,

appellate court will not sua sponte raise issues).





12There is no dispute but that Lewis'pension plan is an "employee benefit

plan" within the meaning of ERISA, 29 U.S.C.§§1002(2)(A)(I) & 1002(3).

p.11


Lewis v. Int'l Brotherhood of Electrical Workers





A state rule of law may be preempted even though it has no direct nexus

with ERISA plans if its effect is to dictate or restrict the choices of ERISA plans

with regard to their benefits, structure, reporting and administration, or if

allowing states to have such rules would impair the ability of a plan to function

simultaneously in a number of states. Keystone Chapter, Assoc. Builders v.

Foley, 37 F.3d 945, 955 (3d Cir. 1994), cert. denied, ___ U.S.___ 115 S.Ct. 1393,

131 L.Ed.2d 244 (1995).





Here, it is inescapable that Lewis' claim is predicated upon the existence

of IBEW's plan, i.e., is premised on the notion that the union's violation of the

Right-To-Work Act resulted in the loss of his pension. Accordingly, we affirm

the Court of Appeals'ruling.





In dissent, Judge Cureton points to a recent United States Supreme Court

opinion narrowing the scope of ERISA preemption. New York State Conference

of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, ___, 115

S.Ct. 1671, 16771 131 L.Ed.2d 695 (1995). In Travelers, the Court noted the

listarting presumption that Congress did not intend to supplant state law, 514

U.S. at 654, 115 S.Ct. at 1676, stating if "relate to" were taken to extend to the

furthest stretch of its indeterminacy, then for all practical purposes pre-emption

would never run its course, for "really, universally, relations stop nowhere."

The Travelers court acknowledged, however, that "a state law might produce

such acute, albeit indirect, economic effects, by intent or otherwise, as to force

an ERISA plan to adopt a certain scheme of substantive coverage or effectively

restrict its choice of insurers, and that such a state law might indeed be

pre-empted under Section 514. 514 U.S. at 668, 115 S.Ct. at 1683 Even under

the more narrow view of Travelers. allowing Lewis' claim in this case would

essentially render the union liable for the benefits, notwithstanding its

constitutional provisions to the effect that only members in good standing are

entitled to benefits. As such, it would, by indirect means, force the union to

adopt a certain scheme of substantive coverage contrary to its constitutional

provisions. Such a holding is contrary to Travelers.







Finally, the dissent cites several cases for the proposition that ERISA

does not preempt state claims where employees merely seek lost pension

benefits as a measure of damages. See Pizlo v. Bethlehem Steel Corp ., 884 F.2d

116 (4th Cir.1989); Hospice of Metro Denver, Inc. v. Group Health Ins.. of

Oklahoma, Inc., 944 F.2d 752 (10th Cir.1991); Howard v. Indiana Michigan

Power Co., 812 F.Supp. 135 (S.D.Ind. 1992); Schlenz v. United Airlines, Inc., 678

F.Supp. 230 (N.D.Cal.1988). We are unpersuaded by this authority. The

dissent directly cites Pizlo for the following proposition:

p.12


Lewis v. Int'l Brotherhood of Electrical Workers





The claims here would not submit [the employer] to "conflicting

employer obligations and variable standards of recovery",

"determine whether any benefits are paid" nor "directly affect the

administration of benefits under the plan." The claims do not

bring into question whether Plaintiffs are eligible for plan benefits,

but whether they were wrongfully terminated from employment

after an alleged oral contract of employment for a term.



324 S.C. at 436,481 S.E.2d at 147. Here, Lewis' claim would subject the IBEW

to conflicting obligations (i.e., it is liable under state law for the pension, but it

is not liable under its constitution for the pension), and would bring into

question whether or not Lewis was eligible for plan benefits. Accordingly, we

do not find Pizlo dispositive. Further, the other case directly quoted by Judge

Cureton, Hospice of Metro Denver, Inc. v. Group Health Ins. of Oklahoma, Inc.,

944 F.2d 752 (10th Cir.1991), did not involve beneficiaries of an ERISA plan.

Moreover, Hospice is contrary to this Court's recent opinion in Baker Hospital

v. Isaac, 301 S.C. 248, 391 S.E.2d 549 (1990)(holding ERISA preempted a

hospital's contract, promissory estoppel, negligence, and misrepresentation

claims).





4. RIGHT-TO-WORK ACT





The Court of Appeals held Lewis had failed to state a cause of action as

the conduct he complained of did not constitute a violation of the Right-To-Work

Act. Given its holding that Lewis' claim was preempted, it was unnecessary for

the Court of Appeals to address this issue. Accordingly, we vacate the portion

of the Court of Appeals' opinion holding Lewis failed to state a claim under the

Right-To-Work Act.





CONCLUSION







We concur with the majority opinion of the Court of Appeals that Lewis'

claims are preempted by both the LMRA and ERISA, since he is essentially

seeking to recover his pension benefits, albeit under the guise of a Right-To

Work claim. Accordingly, we affirm, in result. However, to the extent the Court

of Appeals addressed the viability of Lewis' state law claim, its opinion is

vacated.

p.13


Lewis v. Int'l Brotherhood of Electrical Workers





AFFIRMED IN RESULT. 13

FINNEY, C.J., TOAL, MOORE, and BURNETT, JJ., concur.




13We also granted certiorari to review the Court of Appeals' unpublished

opinion in this matter, Op. No. 96-UP-335 (S.C. Ct. App. filed October 15,1996),

concerning Lewis' entitlement to attorneys' fees. In light of our holding in this

case, we affirm the Court of Appeals' dismissal of that appeal as moot.



p.14