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GSA, Inc. v. Strong
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	1998 ME 235
Docket:	Ken­p;98­p;157
Argued:	October 5, 1998
Decided:	October 28, 1998




	[¶1]  	David Strong appeals from a judgment entered after a bench trial
in the Superior Court (Kennebec County, Alexander, J.) in favor of GSA, Inc.
on Strong's counterclaim seeking damages equal to contributions that he
alleges should have been made by GSA into a pension plan for him.  The trial
court denied the claim concluding that Strong voluntarily elected not to
participate in the pension plan in exchange for receiving greater
compensation.  Because we conclude that the provisions of the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461 (1994),
preempt the application of state law to this matter, we vacate the judgment.
	[¶2]  	GSA is a Maine corporation in the business of asbestos removal. 
The parties stipulated at trial that Strong was an employee of GSA between
1990 and August 22, 1995.  When the employment relationship between
Strong and GSA ended, GSA filed a complaint in District Court to collect
payment on loans that it had made to Strong.  Strong removed the action to
Superior Court and filed a counterclaim with several counts.  The complaint
was amended to add further claims, and all counts of the complaint and
counterclaim were tried to the court without a jury.  Only one issue is before
us on appeal, and that is Strong's claim for an amount equal to his vested
pension benefits pursuant to 29 U.S.C. § 1132(a)(1)(B) (1994).
	[¶3]  	GSA adopted a pension plan in 1990.  The Superior Court found
that Strong was eligible to participate, and should have participated, in the
plan.  GSA's plan states that it "does not permit an otherwise eligible
employee . . . not to participate in the plan."  Strong contends that GSA was
required to make contributions to the pension plan in his behalf.  The trial
court made no findings as to any amounts that GSA should have contributed
to the plan because it found that Strong had waived participation in the plan
in exchange for increased compensation and, therefore, was not entitled to
recover funds from GSA equivalent to his vested share of the pension plan.
	[¶4]  	After judgment, Strong timely moved to amend the trial court's
decision pertaining to his ERISA claim on the ground that federal law
preempts the application of state law equitable defenses.  The motion was
denied.  Strong also claims on appeal that the trial court lacked subject
matter jurisdiction to apply the equitable defense of waiver to an action
brought pursuant to 29 U.S.C. § 1132(a)(1)(B).{1}
I. Jurisdiction
	[¶5]  	Congress granted to the federal courts exclusive jurisdiction of
civil actions brought by a participant, beneficiary or fiduciary to enjoin any
violation of ERISA or an ERISA plan, or "to obtain other appropriate
equitable relief (i) to redress such violations or (ii) to enforce any provisions
of this subchapter or the terms of the plan."  29 U.S.C. § 1132(a)(3) (1994)
and 1132(e)(1) (1994).{2}  State courts have concurrent jurisdiction only over
civil actions brought by a participant or beneficiary "to recover benefits due
to him under the terms of his plan, to enforce his rights under the terms of
the plan, or to clarify his rights to future benefits under the terms of the
plan."  29 U.S.C. § 1132(a)(1)(B). 
	[¶6]  	Strong specifically relied on 29 U.S.C. § 1132(a)(1)(B) in his
counterclaim.  The Superior Court had jurisdiction over Strong's ERISA
counterclaim because it is an action "to recover benefits due to him under
the terms of his plan."  Id.  He maintains that although the court had
jurisdiction to determine his claim pursuant to subsection (a)(1)(B), it did
not have jurisdiction to apply an equitable defense.  He argues the very
existence of section 1132(a)(3), listing equitable remedies, precludes the
application of equitable principles to suits filed in state court pursuant to
section 1132(a)(1)(B).  
	[¶7]  	Actions brought pursuant to 29 U.S.C. § 1132(a)(1)(B) are
equitable actions.  The majority of the federal circuit courts hold that there
is no right to a jury trial in section 1132(a)(1)(B) actions because they are
equitable actions.{3}  These courts recognize that ERISA is based upon the law
of trusts, and suits under the law of trusts are generally characterized as
equitable.  Wardle v. Central States, S.E. and S.W. Areas Pension Fund, 627
F.2d 820, 829 (7th Cir. 1980).  We see no reason to depart from the
majority federal view.  Because claims brought pursuant to 29 U.S.C.
§ 1132(a)(1)(B) sound in equity, the Superior Court has jurisdiction to apply
equitable principles to Strong's counterclaim.
II. Preemption and federal common law waiver
	[¶8]  	Strong contends that even if state courts generally have
jurisdiction to apply equity to section 1132(a)(1)(B) actions, the Superior
Court's decision in this case was preempted by federal law.  The provisions
of ERISA "supersede any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan."  29 U.S.C. § 1144(a) (1994). 
"State law," in these circumstances, means all laws, decisions, rules,
regulations or other state action having the effect of law.  29 U.S.C.
§ 1144(c)(1) (1994).  Courts interpret the preemption provisions
expansively because they are designed to make the regulation of pension
plans an exclusively federal concern.  Pilot Life Ins. Co. v. Dedeaux, 481 U.S.
41, 45-46 (1987).  Therefore, even when the state law itself does not
expressly concern a benefit plan, preemption still applies insofar as the
state law affects ERISA­p;protected rights.  Boren v. N.L. Indus., Inc., 889 F.2d
1463, 1466 (5th Cir. 1989).
	[¶9]  Strong argues that the Superior Court applied a state law defense
of waiver to defeat his ERISA claim, and that such application was erroneous
because state law is preempted in this instance.  We agree.  Although not a
defense that expressly relates to pension plans, state law waiver is
preempted because it is being applied to defeat Strong's claim for benefits
under ERISA.
	[¶10]  Even though the application of state law is preempted, federal
law defenses can be applied by state courts.  Some federal courts have
recognized that a federal common law waiver exists for ERISA cases.  See
HECI Explor. Co. Employees' Profit Sharing Plan v. Holloway (In re HECI
Explor. Co.), 862 F.2d 513, 523 n. 18 (5th Cir. 1988) (citing cases
considering federal common law waiver).  The federal common law of waiver
does not apply, however, where the terms of the pension plan forbid it.  Id.
at 524­p;25.  In the HECI case, a bankruptcy court held that an employee had
waived his right to participate in a partial distribution of plan benefits to
terminated employees.  That plan provided that an employee could elect not
to participate in the plan by giving written notice, but the employee had
never given written notice of non­p;participation.  Therefore, the Fifth Circuit
Court of Appeals held that there was no waiver.  Id. at 525.  As discussed
above, GSA's plan unambiguously states that non­p;participation in the plan is
not an election that eligible employees can make.  Strong was an eligible
employee.  Under the terms of the plan, non­p;participation was
impermissible.  Thus, the federal law of waiver cannot defeat Strong's claim
for benefits.    
	The entry is:
Judgment vacated. Remanded for further
proceedings consistent with this opinion.

Attorney for plaintiff: Randal E. Watkinson, Esq., (orally) Strout & Payson, P.A. P O Box 248 Rockland, ME 04841-0248 Attorney for defendants: Stephen P. Beale, Esq., (orally) Skelton, Taintor & Abbott, P.A. P O Box 3200 Auburn, ME 04212-3200
FOOTNOTES******************************** {1} . Neither the trial court nor the parties have named the equitable considerations employed by the court in denying the ERISA claim. In fact, the trial court did not use the term "equitable" in its initial decision, but in its decision denying Strong's motion to amend it referred to "equitable considerations." No affirmative defenses were pled to the ERISA claim. We conclude, however, that the principle applied by the trial court is, in fact, waiver. See Department of Human Serv. v. Bell, 1998 ME 123, ¶ 6, 711 A.2d 1292, 1294­p;95 (defining waiver as the voluntary and knowing relinquishment of a right). {2} . In relevant part, 29 U.S.C. § 1132(e) states: Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter . . . . State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under paragraphs (1)(B) and (7) of subsection (a) of this section. 29 U.S.C.A. § 1132(e)(1) (1994). {3} . DeFelice v. American Int'l Life Assurance Co. of N.Y., 112 F.3d 61, 64 (2d Cir. 1997); Cox v. Keystone Carbon Co., 894 F.2d 647, 649­p;50 (3d Cir. 1990); Berry v. Ciba­p;Geigy Corp., 761 F.2d 1003, 1006­p;07 (4th Cir. 1985); Borst v. Chevron Corp., 36 F.3d 1308, 1324 (5th Cir. 1994); Bair v. General Motors Corp., 895 F.2d 1094, 1097 (6th Cir. 1990); Wardle v. Central States, S.E. and S.W. Areas Pension Fund, 627 F.2d 820, 829 (7th Cir. 1980); Kirk v. Provident Life & Accident Ins. Co., 942 F.2d 504, 506 (8th Cir. 1991); Blau v. Del Monte Corp., 748 F.2d 1348, 1357 (9th Cir. 1984); Blake v. Unionmutual Stock Life Ins. Co. of Am., 906 F.2d 1525, 1526 (11th Cir. 1990).