Thomas W. Bullock v. The Equitable Life Assurance Society of the United States

This case requires that we again visit the uncertain ground of preemption under the Employment Retirement Income Security Act.(1) On interlocutory appeal, the insurer asks us to overturn the district court's finding that ERISA does not preempt a claimant's state law claims. We are persuaded that the claims as now framed are preempted. We vacate the district court's judgment and remand for further proceedings.

I

Thomas Bullock began working as an agent for The Equitable Life Assurance Society in 1973. In early 1994, he became its Agency Manager, responsible for overall administration of Equitable's sales operations in Mississippi. He participated in the company's pension plan.(2)

The written agreement governing Bullock's employment had no fixed duration, providing that either party could terminate the agreement "with or without cause" on written notice. The contract stated that it was "intended to be the entire and final understanding of the Equitable and [Bullock] concerning the matters covered herein . . . . This contract may only be amended in a written instrument executed by both parties." Bullock alleges that after executing the contract, Equitable promised that he would be retained as Agency Manager until age 65 or as long as he met reasonable production and sales performance criteria. Bullock also alleges that Equitable promised him that he would be treated as a franchise owner and business owner. He further contends that Equitable induced him to spend time and money in developing his agency practice, in lieu of personal sales activity. Bullock contends that he met or exceeded all reasonable sales and production criteria established by Equitable, a fact that Equitable does not appear to dispute.

On July 14, 1998, Equitable informed Bullock that the company was restructuring and several Agency Managers, including Bullock, were to lose their positions. All managers were offered other management or sales agent positions. Bullock resigned after declining the company's offer, which included a benefits package and required a release of claims.

On July 14, 1999, Bullock filed suit in the Circuit Court of Madison County, Mississippi, alleging breach of contract, breach of implied-in-fact contract, unjust enrichment, and promissory estoppel. Count I of Bullock's complaint, entitled "Breach of Express Contract," alleges that Bullock's termination constituted a "breach of the implied covenant of good faith and fair dealing embodied in every agreement." Count II alleges that Bullock was terminated in violation of an implied-in-fact agreement. The complaint alleges that, in violation of the agreements, Equitable terminated Bullock to avoid heightened pension obligations that the company would bear once he reached age 65. The complaint alleged loss of future earnings from the Agency Manager Agreement, lost future commission income, loss of share in the Equitable franchise, loss of investment in his agency franchise, and loss of value of his retirement and other benefits.

Equitable removed the case to the United States District Court for the Southern District of Mississippi on diversity grounds. Equitable moved for a transfer of venue to the United States District Court for the Southern District of New York, relying on both 28 U.S.C. § 1404(a) and the ERISA transfer provision, 29 U.S.C. § 1132(e)(2).(3) Equitable also sought a declaration that ERISA preempted Bullock's claims.

The district court denied Equitable's motion, later certifying the ERISA-preemption question for interlocutory appeal.(4) This Court granted Equitable's petition to permit this appeal.

* * *

Click the case caption above for the full text of the
Court's opinion.

We VACATE the district court's opinion finding no ERISA preemption. We REMAND for proceedings not inconsistent with this opinion, with instructions to grant Bullock the opportunity to amend his complaint to escape federal preemption, if he can.

Unknown

Unknown

Reported by Kent Morlan