McBRIDE v. PLM INTERNATIONAL, INC., 1999 U.S. App. LEXIS 11366 (9th Cir. June 4, 1999)-Before: Dorothy W. Nelson, Robert R. Beezer, and Stephen S. Trott, Circuit Judges. Opinion by Judge Trott; Dissent by Judge Beezer.
This Opinion Substituted by the Court for Withdrawn Opinion of August 20, 1998,
Previously Reported at: 1998 U.S. App. LEXIS 20296.Plaintiff had a good work record with Defendant until Plaintiff claimed Defendant owed him some commissions. Plaintiff had a heated argument with his supervisor the commissions. Defendant eventually paid the commissions. However, Plaintiff's boss placed a memo in Plaintiff's file stating that if Plaintiff was insubordinate again Defendant would fire him. Defendant also claimed Plaintiff did not complete two reports. Plaintiff claimed he did.
Plaintiff was also member of the Defendant's ESOP committee. Plaintiff opposed Defendant's plan to terminate the ESOP by exchanging each share of Defendant's preferred stock held by the ESOP for one share of Defendant's common stock. Plaintiff and some other committee members wrote a letter to the IRS, as part of the determination letter process, protesting the proposed termination. Defendant proposed a compromise to the dissidents. Defendant offered to pay for an outside attorney to evaluate the proposed termination if the dissidents withdrew the letter. All of the dissidents, save Plaintiff, agreed to the withdrawal. The dissidents withdrew the letter. Within three weeks of the letter incident, Defendant fired Plaintiff. Thereafter, Defendant terminated the ESOP and distributed lump sums to all participants including Plaintiff.
Plaintiff sued under 29 U.S.C. § 1140 plus various state law causes of action. The District Court granted Defendant's motion for summary judgment arguing that Plaintiff, since her was not a participant at the time he sued, lacked standing to sue. The District Court also dismissed the state law claims on the grounds it lacked jurisdiction.
The Ninth Circuit noted that the concept of measuring ERISA standing at the time an action is filed is a
judicially created requirement appropriate for most circumstances, but not for the situation in this case. If an employee is a participant at the time of the alleged ERISA violation and alleges that he was discharged or discriminated against because of protected whistle blowing activities, the court held that such an employee has standing to sue under ERISA. To require that the claimant be a participant at the time of filing suit would undermine the very purpose of ERISA's whistleblower provision: to provide a federal remedy for discrimination against plan participants for exercising their protected rights under ERISA."'We hold that under section 1140, participant status must be adjudged at the time of the alleged ERISA violation. Standing under section 1140 does not depend upon whether the former employee seeks to or could obtain reinstatement to covered employment."
Court also held that ERISA preempts Plaintiff's state law claim for breach of the covenant of good faith and fair dealing.
Dissent argued that section 1140 is enforceable exclusively through section 1132. Plaintiff has standing to bring this action only if he is a plan participant, beneficiary or fiduciary. See 29 U.S.C. § 1132(a); Harris v. Provident Life and Accident Ins. Co., 26 F.3d 930, 933 (9th Cir. 1994) ("[A] federal court has no jurisdiction to hear a civil action under ERISA that is brought by a person who is not a 'participant, beneficiary, or fiduciary.'") (quoting Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 27, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983)).
