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December 27, 1991


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 Complain ¶ 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 ¶ 8.

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 at 14.

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 benefits.

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 issue.*fn3

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 ...

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