Degnan v. Publicker Industries

• Court: Court of Appeals for the First Circuit
• Decided: May 1, 1996
• Docket: 95-2244
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT



                              _________________________


No. 95-2244


WILLIAM DEGNAN, JR.,



                                Plaintiff, Appellant,



                                          v.



                         PUBLICKER INDUSTRIES, INC., ET. AL.,



                                Defendants, Appellees.



                              __________________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                       [Hon. Mark L. Wolf, U.S. District Judge]
                                           ___________________



                              _________________________



                                        Before



                            Selya and Cyr, Circuit Judges,
                                           ______________



                            and Gertner,* District Judge.
                                          ______________



                              _________________________



               Sydelle Pittas for appellant.
               ______________

               Thomas E. Shirley,  with whom Liam T.  O'Connell and Choate,
               _________________             __________________     _______

          Hall & Stewart were on brief, for appellees.
          ______________



                              _________________________



                                     May 1, 1996



                              _________________________


________________



          *Of the District of Massachusetts, sitting by designation.


SELYA, Circuit Judge.   William Degnan, Jr., the former
                    SELYA, Circuit Judge.
                           _____________



          president of Fenwal Electronics,  Inc., a wholly owned subsidiary



          of Publicker  Industries, Inc., initiated  this misrepresentation



          action  in  a  Massachusetts   state  court  against  Fenwal  and



          Publicker  on  November  14,  1994.    He  framed  his  complaint



          exclusively in terms of state law, alleging in substance that the



          defendants induced him to take early retirement at age fifty-five



          by promising to revise a corporate  retirement plan so as to make



          him  eligible for full retirement benefits at that age; and that,



          after he retired  (giving up  lucrative employment  opportunities



          elsewhere), the  defendants paid him  the agreed amount  for only



          eighteen months before they breached their promise (claiming that



          he did not  qualify for  full benefits under  the amended  plan).



          The defendants removed the case to the federal district court and



          sought dismissal on preemption grounds.



                    On September 8, 1995, the district court found that the



          Employee  Retirement  Income Security  Act  of  1974 (ERISA),  29



          U.S.C.    1001 et seq.,  and in particular,  ERISA's broad-gauged
                         __ ____



          preemption clause, 29 U.S.C.   1144(a) (1994), preempted Degnan's



          common law misrepresentation claims against the defendants.  Upon



          reviewing the  matter de novo, see  Correa-Martinez v. Arrillaga-
                                __ ____  ___  _______________    __________



          Belendez, 903 F.2d  49, 52  (1st Cir.  1990), we  agree that  the
          ________



          common law claims were preempted and that the complaint as framed



          courted  dismissal.   See Fed.  R. Civ. P.  12(b)(6) (authorizing
                                ___



          dismissal  for  the  pleader's  failure to  state  an  actionable



          claim).


2



We  need  not  dwell  upon the  rationale  for  finding



          preemption.   Suffice it to say that,  in its order of dismissal,



          the district court characterized  the instant case as "analogous"



          in all material  respects to  a case previously  decided by  this



          court, namely, Carlo v. Reed Rolled  Thread Die Co., 49 F.3d 790,
                         _____    ___________________________



          793-95 (1st Cir. 1995)  (ruling that ERISA preempted a  state-law



          misrepresentation claim).   We readily agree  that Carlo controls
                                                             _____



          here, and add only that in his appellate briefs Degnan has failed



          to advance any plausible basis  for distinguishing this case from



          Carlo.
          _____



                    Under ordinary circumstances, this  would be the end of



          the matter.  Where, as here, the plaintiff chooses not to ask the



          trial court for permission to amend but stands upon his complaint



          in the face of an  order dismissing it, and thereafter loses  the



          ensuing  appeal, he  is  not entitled  to  a second  bite  of the



          banana.   See, e.g., Royal Business Group, Inc. v. Realist, Inc.,
                    ___  ____  __________________________    _____________



          933 F.2d 1056, 1066 (1st Cir. 1991) (explaining that when a party



          elects to appeal rather than attempt to amend a complaint, it ill



          behooves that party to suggest at a later date that it could have



          satisfied   the  district   court's  concerns  by   amending  the



          complaint);  James v.  Watt,  716 F.2d  71,  78 (1st  Cir.  1983)
                       _____     ____



          (admonishing that courts should not routinely allow plaintiffs to



          "pursue a  case to judgment and then, if they lose, to reopen the



          case by amending their  complaint to take account of  the court's



          decision"), cert. denied, 467 U.S. 1209 (1984).
                      _____ ______



                    The  rule,  however,  is   not  inflexible.    We  have


3



recognized that, even if  the pleader has  elected to dig in  his



          heels,  appealing  from  a  judgment  of  dismissal  rather  than



          endeavoring to reframe his complaint, "an appellate court has the



          power, in the interest of justice, to grant leave to amend if the



          circumstances warrant."  Rivera-Gomez v. de Castro, 843 F.2d 631,
                                   ____________    _________



          636 (1st Cir. 1988).  This approach finds ample  support in other



          appellate authority, see,  e.g., Bryan v.  Austin, 354 U.S.  933,
                               ___   ____  _____     ______



          933 (1957) (per  curiam); Whitelock v. Leatherman, 460  F.2d 507,
                                    _________    __________



          515 (10th Cir. 1972);  Moviecolor Ltd. v. Eastman Kodak  Co., 288
                                 _______________    __________________



          F.2d 80, 88 (2d Cir.), cert.  denied, 368 U.S. 821 (1961),  among
                                 _____  ______



          the commentators, see, e.g., 3 J. Moore, Moore's Federal Practice
                            ___  ____              ________________________



            15.11  at 15-109 (1983),  in the Code,  see, e.g., 28  U.S.C.  
                                                    ___  ____



          2106  (1994)  ("[A] court  of appellate  jurisdiction  may .  . .



          direct  the entry of  such appropriate judgment  . . .  as may be



          just under  the circumstances."), and in the spirit that pervades



          the Civil Rules,  see, e.g.,  Fed. R. Civ.  P. 15(a)  (counseling
                            ___  ____



          that  leave to  amend  "shall be  freely  given when  justice  so



          requires").



                    This is  a suitable  instance  in which  to invoke  the



          exception  to  the general  rule.   The  appeal  is  in a  highly



          idiosyncratic  posture.  On March 19, 1996, after the parties had



          briefed  this  appeal but  two  weeks before  oral  argument, the



          Supreme Court issued its opinion in Varity Corp. v. Howe, 116  S.
                                              ____________    ____



          Ct. 1065 (1996).   Varity shed new light  on the Court's  earlier
                             ______



          holding  in Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S.
                      ________________________________    _______



          134  (1985), and  indicated  that, in  certain circumstances,  an


4



individual plan participant or beneficiary may be able to  obtain



          equitable relief under  the ERISA statute itself  for harm caused
                           _______________________________



          by an  employer's  breach  of  its fiduciary  obligations.    See
                                                                        ___



          Varity, 116  S. Ct.  at 1075-79;  see  also 29  U.S.C.    1132(a)
          ______                            ___  ____



          (1994) (enumerating equitable remedies  under ERISA).  Because we



          deemed Varity to have possible applicability here, we immediately
                 ______



          called the opinion to the parties' attention and directed them to



          be prepared  to discuss it.   We heard oral argument  on April 2,



          1996.   We then ordered  the parties to  file supplemental briefs



          addressing  the potential  applicability  (if any)  of Varity  to
                                                                 ______



          Degnan's situation.1



                    We  have examined the record  in this case  in light of



          Varity  and of  the parties'  supplemental briefs.   We  see both
          ______



          procedural  and  substantive  problems.   The  procedural problem



          stems from the  fact that Degnan framed his suit  as a common law



          cause of action for misrepresentation rather  than as a statutory



          ERISA-based claim for breach  of a fiduciary duty.   The district



          court  treated  the  claim  as  asserted  and,  under  our  Carlo
                                                                      _____



          precedent, correctly  found the  pleaded  cause of  action to  be



          preempted.  The plaintiff neither asked the court to consider the



          possibility of a statutorily based claim nor sought leave to file



          an amended complaint.   As we have said, these failings  would be



          fatal in the typical case.  See, e.g., Royal Business Group,  933
                                      ___  ____  ____________________



          F.2d at 1066.

                              
          ____________________



               1Simultaneous with the filing of his supplemental brief, the

          appellant also moved to enlarge the record on appeal.  In view of

          our disposition today, the motion is moot.



                                          5



This case, however, is  atypical.  When Degnan eschewed



          amendment  in the district court, Varity had not yet been decided
                                            ______



          and the state of the law was in flux.  We think it is appropriate



          for  an  appellate   court  to  consider  granting  the  type  of



          extraordinary  relief   that  the  plaintiff   requests  here    



          permitting an  amendment even  after affirmance  of  an order  of



          dismissal     when an  important  new decision  intervenes.   See
                                                                        ___



          Dartmouth  Review v. Dartmouth College, 889 F.2d 13, 23 (1st Cir.
          _________________    _________________



          1989) (suggesting  that such  an amendment  should be  allowed if



          "some  new  concept  has  surfaced,  making  workable  an  action



          previously  in the doldrums"); Pross  v. Katz, 784  F.2d 455, 460
                                         _____     ____



          (2d  Cir.  1986) (similar).    That  scenario, broadly  speaking,



          appears to exist here.



                    We  find  added  impetus  for  applying  the  exception



          because of the  nature of the case.  ERISA  is a remedial statute



          designed to fashion anodynes  that protect the interests  of plan



          participants  and  beneficiaries.     See  29  U.S.C.     1001(b)
                                                ___



          (articulating  policy  "to  protect  .   .  .  the  interests  of



          participants in employee benefit  plans and their beneficiaries .



          . . by  providing for appropriate remedies,  sanctions, and ready



          access to the  Federal courts"); see also  Varity, 116 S.  Ct. at
                                           ___ ____  ______



          1078; Johnson v.  Watts Regulator  Co., 63 F.3d  1129, 1132  (1st
                _______     ____________________



          Cir. 1995).  Courts  should not hasten to employ  technical rules



          of  pleading and practice to defeat that  goal.  In this respect,



          Fitzgerald  v.  Codex Corp.,  882 F.2d  586  (1st Cir.  1989), is
          __________      ___________



          instructive.   There the  state law remedies  that the  plaintiff


6



sought were held  to have been entirely displaced  by ERISA.  See
                                                                        ___



          id. at  588.  Although the plaintiff had not attempted to state a
          ___



          federal claim in the district court, we nonetheless  proceeded to



          inquire  whether his complaint could be read to contain a federal



          claim  upon which  relief  might be  granted.   See  id. at  589.
                                                          ___  ___



          Answering that question in the affirmative, we reversed the order



          of dismissal.  See id.
                         ___ ___



                    The  short of it is  that in Fitzgerald,  as in Rivera-
                                                 __________         _______



          Gomez, we departed from our usual praxis to avoid injustice.   We
          _____



          believe that, given the purport and timing of the Court's opinion



          in  Varity, the same result  should obtain here.   The procedural
              ______



          barrier to permitting an amendment is, therefore, superable.



                    The substantive problem is whether or not the plaintiff



          can  state a claim  under Varity.2   At this  juncture, we simply
                                    ______



          cannot tell.  Because the plaintiff  has not yet tried to plead a



          Varity claim, we  do not know  how well the  shoe fits, or if  it
          ______



          fits at  all.  Rather  than guessing at what  facts the plaintiff



          conceivably could allege  in an amended complaint,  we think that



          the course of prudence is to give the plaintiff an opportunity to



          supplement  his  factual  allegations  with  whatever  additional



          averments  he believes  would buttress  Varity-type  claims, and,
                                                  ______



          once  an amended complaint is filed, to permit the district court



          to address the substantive problem, i.e., the  sufficiency of the

                              
          ____________________



               2We  note  that  the  substantive  and  procedural  problems

          interlock because leave to  file an amended complaint  should not

          be granted  if it is clear  that the amendment would  be in vain.

          See  Foman v. Davis,  371 U.S. 178,  182 (1962); Correa-Martinez,
          ___  _____    _____                              _______________

          903 F.2d at 59.



                                          7



amended complaint, in the first instance.



                    We  need go no further.   We remand  with directions to



          grant  the  plaintiff permission  to  file  an amended  complaint



          limited  to whatever  Varity-type  claims he  may envision  under
                                ______



          ERISA.  From that  point forward, the district court  can proceed



          in the ordinary course.  For our part, we take no view of whether



          the plaintiff's case fits the Varity mold from the perspective of
                                        ______



          either pleadings or proof.


We affirm the dismissal of the complaint insofar as  it
                    We affirm the dismissal of the complaint insofar as  it
                    _______________________________________________________



          purports to state claims based on the common law or on state law,
          purports to state claims based on the common law or on state law,
          _________________________________________________________________



          and we  remand the  case to the  district court  with an  express
          and we  remand the  case to the  district court  with an  express
          _________________________________________________________________



          direction  that  it permit  the  plaintiff  to  file  an  amended
          direction  that  it permit  the  plaintiff  to  file  an  amended
          _________________________________________________________________



          complaint limited to his claim(s) under ERISA.  The parties shall
          complaint limited to his claim(s) under ERISA.  The parties shall
          _____________________________________________   _________________



          bear their own costs.
          bear their own costs.
          ____________________


8