The opinion of the court was delivered by: Stanley R. Chesler, United States Magistrate Judge.
This matter comes before the Court upon defendant's motion for
summary judgment and plaintiff's cross-motion for summary
judgment pursuant to Federal Rule of Civil Procedure 56. This
matter was referred to me by the Honorable Harold A. Ackerman.
The parties have consented to have all issues in this matter
tried before the undersigned pursuant to section 636(c) of
Title 28 of the United States Code. Oral argument was heard on
November 25, 1991.
Prior to 1970, plaintiff Neil J. Henry was employed as the
Vice-President of Red Sherman Associates, Inc. ("RSA").
Deposition of Neil J. Henry ("Henry Deposition") at 7. In May,
1970, RSA was purchased by USM Corporation ("USM"). At the time
of the purchase, the plaintiff and J.D. Sherman ("Sherman")
were the sole stockholders of RSA. Amended Complaint ¶ 8. RSA
was incorporated as a division of the Farrel Company
("Farrel"), which was itself a division of USM. Amended
¶ 8. Emhart Corporation ("Emhart") acquired USM in May, 1976;
the Black & Decker Corporation the parent company of defendant
Black & Decker, Inc., acquired Emhart in May, 1989. Henry
Deposition at 9-10; Amended Complaint ¶ 1. Since that time,
defendant has become the sponsor of certain employee benefit
plans formerly sponsored by Emhart.*fn1 Amended Complaint ¶
Pursuant to contractual agreement between plaintiff and USM,
plaintiff was employed in an executive capacity for a five year
period beginning in 1970. Amended Complaint ¶ 5. Plaintiff's
contract provided for participation in the group
hospitalization, profit sharing, and pension plans of USM "on
basis equal to or more favorable than" that which had been
provided by RSA. Amended Complaint ¶ 5; Henry Deposition
Exhibit 1. The contract also stated that it could not be
modified except in writing. Henry Deposition Exhibit 1.
Sherman's written agreement with USM was essentially identical
to plaintiff's contract. Amended Complaint ¶ 6.
Both plaintiff and Sherman elected to terminate their
employment with defendant in May 1975 upon the expiration of
their employment contracts. Having elected to sever their
employment, both also terminated their coverage under
defendant's group medical insurance plan. At the time plaintiff
and Sherman terminated their employment with defendant,
plaintiff was fortysix years old and Sherman was sixty-one
years old. Both then became independent contractors for
defendant in a sales representative capacity. Henry Deposition
In April, 1978, defendant noticed that it had allowed Sherman
to terminate his employment without apprising him of his
eligibility to elect early retirement. In an effort to rectify
its mistake, defendant notified Sherman of the error and, upon
Sherman's election, formally changed his status to reflect
early retirement.*fn2 In September, 1979, Sherman began
receiving retiree medical benefits from defendant. Henry
Deposition at 52-53.
In 1988, plaintiff contacted defendant to request information
about his retirement package. In response to plaintiff's
request for information, defendant informed plaintiff that he
was not eligible for retiree medical benefits because he did
not retire from active employment with defendant when he
terminated his employment in 1975 and he failed to meet the age
and service requirement. Henry Deposition at 38-39.
Plaintiff claims that he believed that retiree medical coverage
was part of the retirement plan to which he was entitled
pursuant to the buyout and employment contract with defendant.
Moreover, plaintiff asserts that it was his understanding that
he and Sherman would be treated equally by defendant. As a
result of his beliefs, plaintiff did not arrange a medical
insurance retirement program for himself; thus, plaintiff
obtained private medical insurance that he claims is not as
complete as that which would have been available to him under
defendant's group medical insurance plan.
Plaintiff commenced this action against defendant Black &
Decker, Inc. in New Jersey Superior Court. The Amended
Complaint alleges that plaintiff has relied to his detriment on
defendant's representation that he would be entitled to medical
benefits upon his retirement. The Amended Complaint seeks
compensatory damages, including, but not limited to,
reimbursement for the individual medical insurance policy which
plaintiff was forced to obtain since the date his employment
with defendant was terminated, future medical benefits,
punitive damages, and attorney's fees.
Defendant asserts that plaintiff's claim for benefits presents
a cause of action under ERISA and, therefore, has removed this
case to federal court pursuant to 28 U.S.C. § 1441(a).
Defendant now moves for summary judgment. In support of its
motion, defendant maintains that plaintiff's common law claim
for retiree medical benefits is preempted by ERISA and, under
ERISA, plaintiff cannot prevail on his claim as a matter of
law. Defendant asserts that plaintiff has no standing to
recover retiree medical benefits under ERISA. Defendant further
maintains that, even if plaintiff succeeds in establishing
standing to pursue his claim for benefits under ERISA,
plaintiff is not eligible for retiree medical benefits because
plaintiff voluntarily terminated his employment with defendant
and, therefore, cannot meet the prerequisite to eligibility of
retirement from active employment.
Plaintiff rejects defendant's assertion that plaintiff's common
law claim for retiree medical benefits is preempted by ERISA.
In response to defendant's motion for summary judgment,
plaintiff now crossmoves for summary judgment. Plaintiff argues
that he is entitled to prevail in this action as a matter of
law under common law contract principles. Plaintiff asserts
that he relied to his detriment upon defendant's promise to
provide him with retiree medical benefits and that, therefore,
defendant is equitably estopped from denying plaintiff such
In its reply brief, defendant reiterates that plaintiff's
common law contract claim for retiree health insurance benefits
is preempted by ERISA. Defendant maintains that because
plaintiff has not asserted any other cause of action and does
not argue that he can prevail under ERISA as a matter of law,
plaintiff's complaint should be dismissed. Moreover, defendant
argues that even if plaintiff's common law estoppel claim was
not preempted by ERISA, it nevertheless must fail because
plaintiff has not established the existence of any binding
contractual promise made by defendant to provide plaintiff with
a retirement package that included medical benefits.
Before confronting the parties' motions for summary judgment,
the Court first must address the issue of preemption.
A. Preemption Under ERISA
To determine whether federal law preempts a state statute, the
court must look to congressional intent. See FMC Corp. v.
Holliday, 498 U.S. ___, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990);
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95, 103 S.Ct.
2890, 2898-99, 77 L.Ed.2d 490 (1983). The Supreme Court has
held that Congress's intent in enacting ERISA was to preempt
completely the area of employee benefit plans and to make
regulation of benefit plans solely a federal concern. Cromwell
v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1276 (6th Cir.
1991) (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41,
107 S.Ct. 1549, 95 L.Ed.2d 39 (1987).
Section 514(a) of ERISA provides that it "shall 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). This
section establishes as an area of exclusive federal concern the
subject of every state law that "relates to" an employee
benefit plan governed by ERISA. 29 U.S.C. § 1003(a). Thus,
the Court must determine whether plaintiff's claims are based
on state laws which "relate to" the employee benefit plan at
The Supreme Court consistently has interpreted the term "relate
to" as embracing a broad spectrum of state laws. See e.g.,
Ingersoll-Rand Co. v. McClendon, ___ U.S. ___, 111 S.Ct. 478,
112 L.Ed.2d 474 (1990); Pilot Life, 481 U.S. at 41, 107 S.Ct.
at 1549-50, Metropolitan Life Ins. Co. v. Taylor,
481 U.S. 58, 107 S.Ct. 1542,
95 L.Ed.2d 55 (1987); Shaw, 463 U.S. at 98, 103 S.Ct. at
2900. The Court has held that a law relates to an employee
benefit plan if it has "`a connection with or reference to such
a plan.'" Holliday, 498 U.S. at ___, 111 S.Ct. at 404
(quoting Shaw, 463 U.S. at 96-97, 103 S.Ct. at 2900). Under
this broad, common-sense meaning, a state law may "relate to" a
benefit plan, and thereby be ...