BUTERO v. ROYAL MACCABEES LIFE INSURANCE COMPANY, 1999 U.S. App. LEXIS 8770 (11th Cir. May 10, 1999)-Before COX and BIRCH, Circuit Judges and GODBOLD, Senior Circuit Judge.
Plaintiff, Simply Fashion learned that its life insurance carrier was going to cancel its policy. To replace the old policy, employees of Simply Fashion met with an agent who assured Simply Fashion that Defendant would supply a replacement policy at the same premium as the old policy. The insurance agent also promised that Defendant's policy would have portability.
Simply Fashion informed its employees, in a written memo, that our life insurance would start on a certain date and that employees enrolled under the old plan would be automatically enrolled in the new plan. Contrary to the memo, Defendant did not offer a portability policy, identical to the old policy, at the same premium. Simply Fashion chose a cheaper non-portable policy. Simply Fashion collected premiums and submitted two premium checks to Defendant.
After the putative effective date, Defendant wrote and asked Simply Fashion to confirm that after the effective date there had been no disabilities or deaths. Thirty days later Simply Fashion told Defendant there were no deaths since the effective date. Simply Fashion omitted the fact that Mr. Butero became disabled after the effective date. One day after Simply Fashion replied to Defendant, Mr. Butero died. On the same day, Defendant retroactively cancelled the policy retroactive to the effective date without stating a reason. Defendant refunded the premiums. In this litigation Defendant argued that it cancelled the policy because of the omission of information related to disabilities.
Mrs. Butero and Simply Fashion sued in state court. The Eleventh Circuit noted (disdainfully) that it was a shotgun pleading. The plaintiffs pled breach of contract, bad faith refusal to pay, and fraud in the inducement. Defendant removed to Federal Court claiming ERISA preemption. Plaintiffs moved to remand the claims against Defendant claiming there was no ERISA plan. They also moved to remand the claims against the insurance agent. The district court remanded the claims against the insurance agent but denied the motion as to the claims against Defendant.
Defendant then moved to strike all of the Plaintiffs' claims claiming that ERISA preempted all of them. The district court dismissed the claims without prejudice. This appeal followed.
Eleventh Circuit held that ERISA "completely preempted" Mrs. Butero's state claims. Eleventh Circuit also called this super preemption. Super preemption arises from Congress's creation of a comprehensive remedial scheme in 29 U.S.C. @ 1132 for loss or denial of employee benefits. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S. Ct. 1542, 1546, 95 L. Ed. 2d 55 (1987). When Congress comprehensively occupies a field of law, "any civil 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.
Eleventh Circuit held that Simply Fashions' claims were subject to ERISA's defensive preemption. Defensive preemption originates in ERISA's express preemption provision, 29 U.S.C. @ 1144(a). Defensive preemption provides only an affirmative defense to certain state-law claims. As an affirmative defense, defensive preemption does not furnish federal subject-matter jurisdiction under 28 U.S.C. § 1331; "a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law." Id. at 63, 107 S. Ct. at 1546. On the other hand, defensive preemption does require dismissal of state-law claims.
Eleventh Circuit noted that, since Mrs. Butero's claims were super preempted, the claims are also subject to defensive preemption. Therefore the district court properly dismissed the claims.
