No. 910 April Term, 1978, Appeal from the Order in the Court of Common Pleas of Allegheny County, Civil Division, No. G.D. 77-14803.
Martha Hartle Munsch, Pittsburgh, for Westinghouse, appellant.
Michael D. Buchwach, Pittsburgh, for Lukus, appellee.
Michael B. Trister, Washington, D. C., for union, appellees.
Cercone, President Judge, and Van der Voort, Spaeth, Wieand and Hoffman, JJ. Van der Voort, J., concurs in the result.
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This is an appeal from an order dismissing preliminary objections by Westinghouse Electric Corporation to a complaint filed by Lois E. Lukus as a class action*fn1 against
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Westinghouse, alleging the violation of rights of female Westinghouse employees under the Pennsylvania Human Relations Act, Act of Oct. 27, 1955, P.L. 744, as amended, 43 P.S. § 951 et seq. (hereinafter the PHRA).*fn2
In her complaint Lukus alleges that while she was employed by Westinghouse, from September 1972 to June 30, 1976, Westinghouse provided its employees "with weekly sickness and accident payments, for a maximum period of twenty-six (26) weeks, for all absences from work due to all disabling non-occupational sicknesses and accidents, except absences from work by female employees disabled by pregnancy or childbirth or complications therefrom." Record at 4a. Lukus further alleges in her complaint that she "was absent from work from approximately October 1975 to March 26, 1976 because of disability due to pregnancy, complications of pregnancy and childbirth," id., and that because of Westinghouse's policy, she did not receive sickness and accident benefits for this period of disability. The theory of the complaint is that Westinghouse's refusal to pay Lukus benefits during her absence due to pregnancy and childbirth constituted sex discrimination prohibited by the PHRA. The complaint prays that Westinghouse be enjoined from "pursuing, using, implementing, adhering to, or agreeing to" any employee sickness or accident plan that excepts from its otherwise all-inclusive coverage pregnancy-related disabilities. The complaint also prays that Westinghouse's plan be declared unlawful, and that monetary damages be awarded.
On September 1, 1977, Westinghouse filed preliminary objections to the complaint, including objections that
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. the federal Employee Retirement Income Security Act, Act of Sept. 2, 1974, P.L. 93-406, 88 Stat. 832, 29 U.S.C. §§ 1001, et seq. (hereinafter ERISA), has preempted PHRA's regulation of Westinghouse's employee disability plan;
2. PHRA, by its own terms, does not apply to Westinghouse's plan;
3. Lukus has failed to exhaust her administrative remedies under PHRA; and
4. Lukus is barred by § 962(b) of PHRA from maintaining her action because she previously filed a complaint in federal court based upon the same grievance.*fn3
In response, Lukus filed preliminary objections to Westinghouse's preliminary objections, and ultimately an answer to Westinghouse's factual averments. Record at 74a. On April 20, 1978, the lower court dismissed both Westinghouse's and Lukus's preliminary objections. On May 8, 1978, pursuant to 42 Pa.C.S.A. § 702(b) (1979 Pamphlet) and Pa.R.A.P. 1311, the lower court amended its April 20 order to certify that it believed that its dismissal of Westinghouse's preliminary objections involved "controlling questions of law as to which there is substantial ground for difference of opinion and that an immediate appeal therefrom may materially advance the ultimate termination of this litigation." Record at 2a. On June 5, 1978, Westinghouse petitioned this court for permission to appeal from the lower court's order, stating that if permission were granted, the appeal would challenge only the lower court's dismissal of the four objections listed above. On July 26, 1978, we granted the petition.*fn4 On October 26, 1978, argument was
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heard on the appeal by a three-judge panel of this court, but because of the considerable importance of the issues, argument was rescheduled and heard before the court en banc on April 12, 1979. For the reasons below, we now affirm in part and vacate in part the lower court's order, and remand for further proceedings in accordance with this opinion.
Westinghouse's first preliminary objection is that "ERISA . . . has preempted PHRA's regulation of Westinghouse's employee disability plan." The premises of this objection may be stated as follows: Congress enacted ERISA to afford comprehensive federal protection of the interests of participants in employee benefit plans.*fn5 There
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is no dispute that Westinghouse's employee disability plan is an "employee welfare benefit plan" within 29 U.S.C. § 1002(1),*fn6 and is subject to the provisions of ERISA.*fn7 State
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regulation of the plan, by the PHRA, is therefore controlled by the preemption, or supersedure, provision in 29 U.S.C. § 1144, which provides:
(a) Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . . .
(c) For purposes of this section:
(1) The term "State law" includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State. . . .
(2) The term "State" includes a State, any political subdivisions thereof, or any agency or instrumentality of either, which purports to regulate, directly or indirectly, the
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terms and conditions of employee benefit plans covered by this subchapter.*fn8
This preemption must be given effect, for it constitutes an exercise by Congress of its powers under article VI, clause 2, of the United States Constitution (the supremacy clause).*fn9
The general principles that we must apply in appraising Westinghouse's preliminary objection are settled. "[W]hen Congress has 'unmistakably . . . ordained,' . . . that its enactments alone are to regulate a part of commerce, state laws regulating that aspect of commerce must fall. This result is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose." Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51
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L.Ed.2d 604 (1977). Accord: Malone v. White Motor Corp., 435 U.S. 497, 98 S.Ct. 1185, 55 L.Ed.2d 443 (1978) (plurality opinion). However, in deciding whether Congress has "unmistakably . . . ordained" that its enactment supersedes a state's law, a court is to proceed with caution; it must "start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." Ray v. Atlantic Richfield Co., 435 U.S. 151, 157, 98 S.Ct. 988, 994, 55 L.Ed.2d 179 (1978), quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947). "This assumption provides assurance that 'the federal-state balance,' . . . will not be disturbed unintentionally by Congress or unnecessarily by the courts." Jones v. Rath Packing Co., supra, 430 U.S. at 525, 97 S.Ct. at 1309.*fn10 "Unless the requisite pre-emptive intent is abundantly clear, we should hesitate to invalidate state and local legislation for the added reason that 'the state is powerless to remove the ill effects of our decision, while the national government, which has the ultimate power, remains free to remove the [state] burden." City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 643, 93 S.Ct. 1854, 1864, 36 L.Ed.2d 547 (1973) (REHNQUIST, J., joined by STEWART, WHITE and MARSHALL, JJ., dissenting) (citation omitted). Moreover, we are to bear in mind that "each case turns on the peculiarities and special features of the federal regulatory scheme in question." City of Burbank v. Lockheed Air Terminals, Inc., supra at 638, 93 S.Ct. at 1862.
Without doubt, the preemptive effect of section 1144 is quite broad. The United States Supreme Court has intimated
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as much in Malone v. White Motor Corp., (plurality opinion), supra, 435 U.S. at 512, 98 S.Ct. at 1193 (plurality opinion), and other federal courts have consistently so held, see e. g., Wadsworth v. Whaland, 562 F.2d 70, 76-77 (1st Cir.1977), cert. denied, 435 U.S. 980-81, 98 S.Ct. 1630, 56 L.Ed.2d 72 (1978); Bell v. Employee Security Benefit Ass'n, 437 F.Supp. 382 (D.Kan.1977); Wayne Chemical, Inc. v. Columbus Agency Service Corp., 426 F.Supp. 316 (N.D.Ind.), modified and affirmed, 567 F.2d 692 (7th Cir.1977).*fn11 This general conclusion, however, is not dispositive of the case before us.*fn12 We must still decide whether the preemptive
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effect of section 1144 is so broad that it "unmistakably" extends to the PHRA.
It will be recalled that the preemptive language of section 1144 is that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . . ." As one considers this language, it becomes evident that the question we must answer is, What do the words "relate to" mean?
Plainly, the words "relate to" are ambiguous. Do they mean, relate to in any, even the most indirect, way, or only in an intimate, very direct, way? In other words, are they to be read broadly, or narrowly? The gist of Westinghouse's argument is that they are to be read broadly.
Initially it may be noted that Westinghouse's argument is contrary to the general principle that we should "start with the assumption," Rice v. Santa Fe Elevator Corp., supra, that in enacting ERISA, Congress did not intend to preempt the PHRA. Given that assumption, it follows that if preemption may be avoided by construing a statute narrowly, then we should construe the statute narrowly.
The conclusion that we should approach the problem before us in this manner is supported by the cases, which have consistently examined how intimate was the relationship between ERISA and the state law in question. If the relationship was intimate, in that a state law had attempted to regulate areas explicitly governed by the provisions of ERISA, courts have not hesitated to hold that the state law was preempted by section 1144. See, e. g., National Carrier's Conference Comm. v. Heffernan, 454 F.Supp. 914 (D.Conn.1978) (state tax specifically directed at employee welfare benefit plans preempted); In re C.D. Moyer Company Trust Fund, 441 F.Supp. 1128 (E.D.Pa.1977), aff'd without opinion 582 F.2d 1273 (3d Cir.1978) (state law providing order of distribution of plan assets upon plan's termination
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preempted); Hewlett-Packard Co. v. Barnes, 425 F.Supp. 1294 (N.D.Cal.1977), aff'd 571 F.2d 502 (9th Cir.), cert. denied, 439 U.S. 831, 99 S.Ct. 108, 58 L.Ed.2d 125 (1978) (overlapping state regulation of welfare benefit plans preempted); Azzaro v. Harnett, 414 F.Supp. 473 (S.D.N.Y.1976), aff'd without opinion, 553 F.2d 93 (2d Cir.), cert. denied, 434 U.S. 824, 98 S.Ct. 71, 54 L.Ed.2d 82 (1977) (state Department of Insurance powerless to conduct inquiry into the pension benefit status of a participant in the fund). In instances, however, where a state law relating primarily to matters not governed by ERISA only indirectly affected employee benefit plans, that is, in a way not in conflict with the purposes ERISA was designed to achieve, courts have usually held that the state law was not preempted. Thus, most courts, including this one, have held that state domestic relations laws are not preempted by section 1144, and that employee pension benefits may therefore be garnished to satisfy court-ordered support payments, or divided pursuant to state community property laws. See, e. g., AT&T v. Merry, 592 F.2d 118 (2d Cir.1979); Operating Engineers Local # 428 v. Zamborsky, 470 F.Supp. 1174, 5 Fam.L.Rep. (BNA) 2654 (D.C.Ariz.1979); Cartledge v. Miller, 457 F.Supp. 1146 (S.D.N.Y.1978); Cody v. Riecker, 454 F.Supp. 22 (E.D.N.Y.1978), aff'd, 594 F.2d 314 (2d Cir.1979); Stone v. Stone, 450 F.Supp. 919 (N.D.Cal.1978); General Dynamics Corp. v. Harris, 581 S.W.2d 300, 5 Fam.L.Rep. (BNA) 2644 (Tex.Civ.App.10th Dist., 1979); Western Electric Co. v. Traphagen, 166 N.J.Super. 418, 400 A.2d 66, 5 Fam.L.Rep. (BNA) 2541 (App.Div.1979); Commonwealth ex rel. Magrini v. Magrini, 263 Pa. Super. 366, 398 A.2d 179 (1979); Johnston v. Johnston, 5 Fam.L.Rep. (BNA) 2045 (Cal.Ct.App.2d Dist., filed 10/27/78); Johns v. Retirement Fund Trust, 5 Fam.L.Rep. (BNA) 2117 (Cal.Ct.App. 4th Dist., filed 10/13/78; Biles v. Biles, 5 Fam.L.Rep. (BNA) 2054 (N.J.Super.Ct. Chancery Div., filed 10/2/78). But see Francis v. United Technologies Corp., 458 F.Supp. 84 (N.D.Cal.1978); Kerbow v. Kerbow, 421 F.Supp. 1253 (N.D.Tex.1976).
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Here, it is evident that the relationship of the PHRA to ERISA is not intimate but indirect. ERISA is primarily concerned with the delivery of benefits-with "the soundness and stability of plans"*fn13 -whereas the PHRA is primarily concerned with the identification of the beneficiaries of the plans.*fn14 As we try to strike the proper "'federal-state balance,'" Jones v. Rath Packing Co., supra, this indirect relationship is by itself a powerful reason for concluding that when Congress enacted ERISA, it did not intend to preempt a state law, such as the PHRA, forbidding sex discrimination.*fn15
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In fact, however, we need not rely only on the general principles we have so far discussed. While they all lead to the conclusion that section 1144 should be construed narrowly, so as to avoid preemption of the PHRA, any doubt is removed by the legislative history, which shows that ERISA was enacted only upon assurance by the floor managers that laws forbidding sex discrimination would not be preempted. The critical exchange during Senate debate occurred between Senator Mondale and Senator Williams:
Mr. MONDALE. Mr. President, for some months I have been deeply concerned with the need to insure that pension benefits are made available on a nondiscriminatory basis to all those who have earned them regardless of race, color, national origin, religion, or sex.
The chance to achieve economic security-based on merit-is the heart of the American dream; and where pension benefits are unfairly reduced or denied, the results are tragic for those who have earned a dignified retirement.
I had intended at this time to raise my amendment incorporating nondiscrimination based ...