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ROVIRA v. AT & T

March 29, 1991

SANDRA ROVIRA, INDIVIDUALLY AND AS EXECUTOR OF THE ESTATE OF MARJORIE FORLINI, FRANK MORALES AND ALFRED MORALES, PLAINTIFFS,
v.
AT & T, DEFENDANT.



The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.

OPINION AND ORDER

Defendant AT & T moves pursuant to Rules 12(b) and (c) of the Federal Rules of Civil Procedure to dismiss the local law, state law and common law claims in Counts IV, V and VI of the complaint, which allege discrimination on the basis of sexual orientation and marital status and breach of contract, on the grounds that those claims are preempted by ERISA and that plaintiffs lack standing to assert them. This Court is asserted to have jurisdiction over the local, state and common law causes of action in that they are pendent to the first three causes of action which are brought under a federal statute, the Employee Retirement Income Security Act ("ERISA"). 29 U.S.C. § 1001 et seq.

For the reasons stated below, the motion to dismiss Claims IV, V and VI on the ground of ERISA preemption is denied, but the Court declines to exercise pendent jurisdiction over them and those claims are dismissed without prejudice to their being the subject of an action in state court.

BACKGROUND

Plaintiff Sandra Rovira ("Rovira") was the gay life partner of Marjorie Forlini, who died of cancer in 1988. Plaintiffs Frank and Alfred Morales are Rovira's children from a prior marriage and are alleged to have lived with Rovira and Forlini for ten of the twelve years the two women lived together. At the time of Forlini's death they were, respectively, 22 and 19 years of age. Forlini was an AT & T sales manager, covered under AT & T's Management Pension Plan, which provides for a Sickness Death Benefit to the qualified beneficiaries of eligible employees. The complaint states that each of the plaintiffs was "one of Forlini's beneficiaries under the AT & T Management Pension Plan," and seeks sickness death benefits on that basis. Complaint, ¶¶ 4-6.*fn1

Rovire inquired about and applied for benefits after Forlini's death on September 19, 1988, alleging that she and her children stood in the position of spouse and dependent children of Forlini. AT & T's benefits department denied the claim orally and plaintiffs appealed the denial to the AT & T Benefit Committee. The Benefit Committee affirmed the denial of plaintiffs' claim by letter of July 26, 1989. Rovira further appealed the denial of benefits to the AT & T Employees' Benefits Committee, which by letter of January 17, 1990, denied the claim, allegedly stating that Rovira did not qualify as a plan beneficiary because her relationship with Forlini did not constitute a valid marriage under New York law and Frank and Alfred Morales did not qualify because they were not the natural or adopted children of Forlini or her legal spouse. Plaintiffs also allege that the same letter stated that AT & T benefits were "administered uniformly to all employees without discrimination on the basis of age, race, color, religion, mental or physical handicap, national origin, sex, sexual preference or orientation." Complaint, ¶ 36. The complaint includes allegations of hostile, offensive and degrading treatment Rovira received at the hands of AT & T's benefits department employees when she inquired about any benefits for herself and her children as Forlini's family, and the refusal of the benefits department employees to respond to her requests for information in spite of her telling them she was also the executor of Forlini's estate.

DISCUSSION

Count IV claims a violation of the New York City Human Rights Law, in that AT & T is alleged to have discriminated against Rovira on the basis of sexual orientation, in its employees' treatment of her when she as executor of Forlini's estate made application on behalf of the beneficiaries. New York City Administrative Code, Chap. 1, § 8.108.1 (1986) ("New York City Human Rights Law"). Count V claims a violation of the New York State Executive Law because in that same context it is alleged that AT & T employees discriminated against Rovira on the basis of marital status. N.Y.Exec.L. § 296(1)(a) ("New York State Human Rights Law"). Count VI claims breach of contract based on AT & T's contractual promise to apply AT & T's overall equal opportunity policy when providing Sickness Death Benefits to all eligible employees, without discrimination as to marital status or sexual orientation. AT & T claims that Counts IV, V and VI arise from the administration and denial of employee benefits and so are preempted by ERISA, and that plaintiffs lack standing under the above statutes and under the common law for breach of contract. At the outset, the Court notes that Counts IV, V and VI are asserted only on behalf of plaintiff Rovira and so it is as to her alone that the questions of standing and preemption are at issue here. Complaint, ¶¶ 77-79, ¶¶ 81-83, ¶¶ 86-87.

I. ERISA Preemption

Plaintiffs assert their claims under Counts IV, V and VI are distinguished from their ERISA claims in accordance with the holding in Aetna Life Insurance Co. v. Borges, 869 F.2d 142 (2nd Cir. 1989), cert. denied, ___ U.S. ___, 110 S.Ct. 57, 107 L.Ed.2d 25 (1989). Aetna v. Borges involved a claim of preemption of Connecticut's escheat laws by ERISA, in a proceeding by the state to take control over uncollected drafts for ERISA benefits held by Aetna. The Second Circuit held that while ERISA's preemption provision is deliberately very broad, it was not meant to preempt every state law having any impact on employee benefit plans and will not be held to preempt statutes whose effect on pension plans is "tangential and remote." 869 F.2d at 145. The Second Circuit held, in general, that laws that have been ruled preempted by ERISA are those that "provide an alternative cause of action to employees to collect benefits protected by ERISA, refer specifically to ERISA plans and apply solely to them, or interfere with the calculation of benefits owed to an employee." 869 F.2d at 146. While anti-discrimination statutes are "laws of general application" and constitute "traditional exercises of state power or regulatory authority," id., their effect on ERISA plans is not incidental if they are asserted to determine whether benefits are paid or who is a beneficiary. 869 F.2d at 147, 147 n. 4. See also, Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983).

Plaintiffs acknowledge that their claims under Counts IV, V and VI for benefits under an ERISA plan would be preempted by ERISA and state those counts are claims for emotional distress caused by the hostile and degrading treatment of Rovira by AT & T employees due to her sexual orientation or marital status. Accordingly, the remainder of the opinion will address those claims as so delineated.

AT & T argues that ERISA preempts Rovira's claims for emotional distress because the acts giving rise to the claims occurred during the processing or administration of benefits. Such a wide-ranging interpretation of the ERISA preemption is not totally persuasive.*fn2 While the Fourth Circuit has held that "state laws, insofar as they are invoked by beneficiaries claiming relief for injuries arising out of the administration of employee benefit plans, `relate to' such plans and, absent an applicable exemption, are preempted by ERISA," Powell v. Chesapeake and Potomac Telephone Co., 780 F.2d 419, 421 (4th Cir. 1985), cert. denied, 476 U.S. 1170, 106 S.Ct. 2892, 90 L.Ed.2d 980 (1986),*fn3 finding a preemption in the present case would constitute a broader ruling. The plaintiff in Powell claimed intentional infliction of emotional distress in the mishandling of an ongoing, established beneficiary relationship with her employer's benefits department, in connection with her disability and claims thereunder. In Pilot Life Insurance v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), the Supreme Court held that state common law causes of action by an employee asserting improper processing of a claim for benefits under an employee benefit plan were preempted by ERISA. Similarly, in Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987), the Supreme Court held that a former employee's state law breach of contract and tort claims for intentional infliction of mental anguish and for wrongful termination of disability benefits were preempted by ERISA and thus removable to federal court.

Here, plaintiff claims she was treated impermissibly before she had any established beneficiary relationship with AT & T or its benefits department. AT & T is alleged to have ignored Forlini's survivors and refused to give Rovira the attention, help or information she needed even to request ...


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