Fifth DCA Reverses Dismissal Based Upon ERISA Preemption

In Universal Checks & Forms, Inc., et al. v. Pencor, Inc. (5D12-3593), the Fifth District Court of Appeal reversed the trial court's judgment of dismissal based upon ERISA preemption. The court stated that "Universal filed a complaint for breach of fiduciary duty and negligence in connection with Pencor’s recommendation and sale to Universal of a defined benefit plan. According to the complaint, Pencor failed to disclose a critical feature of the defined benefit plan, namely, the impact of the age of employees on those employees’ share of the plan…It is Universal’s position that Pencor recommended a defined benefit plan that was unsuitable for Universal. The complaint requested compensatory damages of no less than $80,000, disgorgement of commissions, prejudgment interest, costs, and fees." "Pencor moved to dismiss the complaint on the basis that the claims were preempted by ERISA. The motion was granted and the trial court entered a final judgment of dismissal." 

The court noted that "in enacting ERISA, Congress intended to make the regulation of pension plans solely a federal concern. Firestone Tire & Rubber Co. v. Neusser, 810 F.2d 550, 552 (6th Cir. 1987). Consequently, ERISA preempts 'any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . . .' 29 U.S.C. § 1144(a)."

"Initially, the Supreme Court gave a broad dictionary interpretation to the 'relate to' preemption language, stating that a law 'relates to' an employee benefit plan 'if it has a connection with or reference to such a plan.' Shaw, 463 U.S. at 96-97. However, the Shaw court also recognized that some state actions may affect employee benefit plans 'in too tenuous, remote, or peripheral a manner to warrant a finding that the law ‘relates to’ the plan.' Id. at 100 n.21." 

The court concluded:

In the instant case, we do not believe that permitting Universal to proceed with its action against Pencor would, in any way, interfere with Congress’s intent to ensure that plans and plan sponsors are subject to a uniform body of benefits law. Universal is not asserting wrongdoing in the administration of the employee benefit plan, nor is it challenging the terms and conditions of the plan as created. Rather, Universal is alleging that Pencor engaged in tortious conduct by recommending that Universal create an employee benefit plan as a retirement investment vehicle and tax shelter. The recommendation, and the tortious conduct allegedly associated with it, necessarily occurred before the plan was even formed.

Therefore, the court reversed the dismissal.