Alexander Menkes v. Prudential Insurance Co of Ame

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________

No. 13-1408
_____________

ALEXANDER L. MENKES; STEPHEN WOLFE,
individually and on behalf of all others similarly situated,

Appellants

v.

PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation;
QINETIQ NORTH AMERICA OPERATIONS, LLC, a
Delaware corporation;
QINETIQ NORTH AMERICA, INC., a Delaware
corporation;
WESTAR AEROSPACE & DEFENSE GROUP, INC, a
Nevada corporation;
DOES 1-100, presently known individuals, partnerships,
companies
and/or other entities, inclusive
____________

On Appeal from the United States District Court
for the District of New Jersey
(No. 2-12-cv-02880)
District Judge: Hon. Susan D. Wigenton
____________

Argued: December 10, 2013

Before: McKEE, Chief Judge, FUENTES, and CHAGARES,
Circuit Judges.

(Filed: August 6, 2014)
Andrew P. Bell, Esq. (ARGUED)
Michael A. Galpern, Esq.
Locks Law Firm, LLC
457 Haddonfield Road, Suite 500
Cherry Hill, NJ 08002
Counsel for Appellants

Hillary Richard, Esq. (ARGUED)
MaryAnn Sung, Esq.
Brune & Richard LLP
One Battery Park Plaza, 34th Floor
New York, NY 10004

Melissa A. Herbert, Esq.
Robin H. Rome, Esq.
Kristine V. Ryan, Esq.
Nukk-Freeman & Cerra, P.C.
26 Main Street, Suite 301
Chatham, NJ 07928
Counsel for Appellee Prudential Insurance Co.
of America

Kimberly B. Martin, Esq.
Scott B. Smith, Esq. (ARGUED)
Bradley, Arant, Boult, Cummings LLP
200 Clinton Avenue West, Suite 900
Huntsville, AL 35801

Edmund S. Sauer, Esq.
Bradley, Arant, Boult, Cummings LLP
1600 Division Street, Suite 700
Nashville, TN 32703

Diane A. Bettino, Esq.
Kellie A. Lavery, Esq.
Reed Smith LLP
Princeton Forrestal Village
136 Main Street, Suite 250
Princeton, NJ 08540
Counsel for Appellees Qinetiq N.A. Operations, LLC,
Qinetiq, N.A., Inc., & Westar Aerospace & Defense Group,
Inc.

2
 ____________

OPINION
____________

CHAGARES, Circuit Judge.

Putative class plaintiffs Alexander L. Menkes and
Stephen Wolfe appeal the District Court’s dismissal of their
complaint for failure to state a claim. This appeal requires us
to determine whether certain supplemental insurance
coverage is governed by the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq.
We conclude that in the circumstances presented here, it is,
and that it cannot be unbundled from the plaintiffs’ broader
employer-provided ERISA benefits plan. We then must
decide whether ERISA preempts the various state law claims
that the plaintiffs asserted. Concluding that it does, we will
affirm the District Court’s dismissal.

I.

We take the following facts from the plaintiffs’
complaint, documents to which it referred and upon which it
relied, and the plaintiffs’ proposed amended complaint, which
we must accept as true for the purposes of a motion to
dismiss. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d
Cir. 2009). The plaintiffs were employed by defense
contractor defendant Qinetiq1 to work on a military base in
Kirkuk, Iraq in 2008. As employees, the plaintiffs were
automatically enrolled in Qinetiq’s Basic Long Term
Disability, Basic Life, and Accidental Death and
Dismemberment insurance policies (the “Basic Policies”). It

1
The plaintiffs were variously employed by defendants
Qinetiq North America Operations, LLC, Qinetiq North
America, Inc., and Westar Aerospace & Defense Group, Inc.,
all of which share the same ownership. The claims against all
three of these defendants are the same, and the defendants
defended this case collectively.
3
is undisputed that Qinetiq offered this insurance coverage
pursuant to ERISA. These policies were established pursuant
to a single group contract with the Prudential Insurance
Company of North America, and Qinetiq paid the premiums
for each of these policies on behalf of its employees.

Both plaintiffs also purchased supplemental insurance
coverage to augment their basic benefits. Both purchased
what the plaintiffs term “Supplemental Long Term
Disability” (“Buy Up LTD”) coverage, and Menkes
purchased “Supplemental Accidental Death &
Dismemberment” (“Supplemental AD&D”) coverage
(collectively, the “Supplemental Coverage”).2 The plaintiffs
paid additional premiums out of their own funds for this
Supplemental Coverage in return for enhanced benefits
should they sustain a covered injury.

The Supplemental Coverage operated pursuant to the
exact same benefit terms, rules, exclusions, and claim
procedures as the Basic Policies. These terms, rules,
exclusions, and claim procedures for the Basic Policies and
Supplemental Coverage were outlined in a single insurance
booklet certificate (“Booklet”) and a single summary plan
description (“SPD”) for each type of insurance. That is, the
terms, rules, exclusions, and claim procedures for Qinetiq’s
long term disability policy, for example, were contained in a
single Booklet and SPD; there were not separate Booklets and
SPDs for the Basic Policy and Supplemental Coverage. Each
SPD explicitly stated that the insurance coverage was being
provided “under your Employer’s ERISA plan(s).” Appendix
(“App.”) 553, 621. Each Booklet stated that the plaintiffs’
coverage was governed by a single group contract between
Qinetiq and Prudential, and that Qinetiq was the plan sponsor
and administrator. App. 552, 620. Had Qinetiq chosen not to
provide (or to terminate) the Basic Policies, its employees
would not have been able to purchase (or continue) the
Supplemental Coverage. An employee seeking benefits
under a given policy would file a single claim, not separate

2
The plaintiffs’ original complaint alleges that they also
purchased Supplemental Term Life coverage, but they do not
seek any relief related to this policy on appeal.
4
claims for Basic Policy benefits and Supplemental Coverage
benefits.

As is relevant to this appeal, each Booklet informed
the plaintiffs of the policies’ respective war exclusion
policies. The Long Term Disability Booklet provided that
“[y]our plan does not cover a disability due to war, declared
or undeclared, or any act of war.” App. 531. The Accidental
Death and Dismemberment Booklet provided that loss is not
covered if it results from “[w]ar, or any act of war. ‘War’
means declared or undeclared war and includes resistance to
armed aggression.” App. 594. These war exclusion clauses
applied to both the Basic Policies and the Supplemental
Coverage because, again, each type of coverage was
governed by a single set of documents with a single set of
rules and exclusions.

The plaintiffs were not otherwise uninsured for injuries
they incurred on account of war or acts of war. As part of its
government contract, Qinetiq also obtained insurance for its
employees as required by the Defense Base Act (“DBA”), 42
U.S.C. § 1651. DBA insurance provides coverage for war-
related injuries sustained by contract employees while serving
at military bases abroad. Qinetiq obtained this coverage not
from Prudential, but from the Insurance Company of the State
of Pennsylvania (“ICSP”).

Menkes filed a claim under his Long Term Disability
policy for three injuries he received while in Iraq: (1) a back
injury, (2) a positive tuberculosis (“TB”) test, and (3) post-
traumatic stress disorder (“PTSD”). Prudential denied his
claim for all three injuries. It used the war exclusion
provision to deny benefits only for his PTSD injury. It
declined to compensate him for his back injury because it
determined that his injury did not sufficiently impair his
ability to pursue his regular occupation. It declined to
compensate him for his claimed TB because he subsequently
had a negative TB test and showed no signs of being affected
by any TB symptoms. Menkes filed only a single claim for
benefits owed to him under his Long Term Disability policy
— he does not allege that he filed one claim for benefits
under the Basic Policy and another for benefits under the
Supplemental Coverage. Menkes filed another claim for

5
benefits under his DBA policy for these same injuries.
Although ICSP and Qinetiq disputed the extent of his injuries,
the parties ultimately agreed to settle that claim.
Wolfe does not allege that he suffered any injury or
ever filed any claim for benefits under either one of the
Prudential policies or the DBA policy.

The plaintiffs filed this action in the District of New
Jersey on May 14, 2012. In their original complaint, they
alleged six counts, including: (1) violation of the New Jersey
Consumer Fraud Act (“CFA”), N.J. Stat. Ann. § 56:8-1, et
seq.; (2) violation of the Truth in Consumer Contract,
Warranty, and Notice Act (“TCCWNA”), N.J. Stat. Ann. §
56:12-1, et seq.; (3) breach of contract and breach of the
implied covenant of good faith and fair dealing; (4)
intentional or negligent misrepresentation and/or omission;
(5) punitive damages; and (6) alternatively, violation of the
consumer fraud laws of various states. They contended that
Prudential fraudulently induced them to buy the Supplemental
Coverage knowing that any claim they filed would likely be
subject to the war exclusion clauses because their place of
employment was in a war zone in Iraq, rendering the
Supplemental Coverage effectively worthless.3 They
additionally alleged that Prudential deliberately concealed a
policy or practice of using the war exclusion clauses to deny
benefits for any and all injuries suffered while stationed
abroad. The remedies the plaintiffs sought were limited to
return of the premiums they paid and punitive damages.4

The District Court dismissed the suit in its entirety. It
held that the Supplemental Coverage was governed by

3
These same war exclusion clauses would have rendered the
Basic Policies (for which defendant Qinetiq paid all of the
premiums) worthless as well.
4
The plaintiffs brought this as a putative class action on
behalf of all employees of Department of Defense contractors
who worked in Iraq and/or Afghanistan from February 10,
2006 through the present who purchased Supplemental
Coverage with a war exclusion clause. App. 39-40. Menkes
sought to represent an additional sub-class of employees who
had sought and were denied benefits under the Supplemental
Coverage. App. 40.
6
ERISA and could not be unbundled from the Basic Policies.
Viewing the Basic Policies and Supplemental Coverage as
closely related component parts of a single plan, it held that
all of the plaintiffs’ state law claims were expressly
preempted by ERISA’s broad preemption clause, § 514(a),
which provides that ERISA “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). In the
alternative, it held that the plaintiffs’ claims were preempted
by § 502(a) of ERISA because the causes of action that the
plaintiffs asserted conflicted with ERISA’s exclusive civil
enforcement scheme. It also held that the DBA preempted
Menkes’s state law claims.

The District Court also denied the plaintiffs’ motion
for leave to amend their complaint as futile. The plaintiffs
submitted a proposed amended complaint in which they: (1)
deleted any reference to the New Jersey TCCWNA, (2)
deleted all references to the term life insurance policies, and
(3) added a state law breach of fiduciary duty claim. The
court addressed these proposed revisions in its opinion and
held that the proposed amended complaint was substantially
similar to the original. The plaintiffs timely appealed.

II.

The District Court exercised jurisdiction pursuant to
the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2). We
have jurisdiction pursuant to 28 U.S.C. § 1291.

Our review of the District Court’s grant of a motion to
dismiss based on ERISA preemption is plenary. Pryzbowski
v. U.S. Healthcare, Inc., 245 F.3d 266, 268 (3d Cir. 2001).
To survive a motion to dismiss pursuant to Fed. R. Civ. P.
12(b)(6), a plaintiff must allege “enough facts to state a claim
to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A complaint has facial
plausibility when there is enough factual content “that allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). A court must accept all factual
allegations in the complaint as true and draw all reasonable

7
inferences in favor of the plaintiff. Phillips v. Cnty. of
Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).
We review the denial of a motion for leave to amend
for abuse of discretion. Lum v. Bank of Am., 361 F.3d 217,
223 (3d Cir. 2004).

III.

The plaintiffs contend that the District Court erred in
concluding that their state law claims were preempted by
ERISA § 514(a), 29 U.S.C. § 1144(a), which broadly
preempts state laws that “relate to” an ERISA plan. The
plaintiffs argue that their claims are not preempted because:
(1) the Supplemental Coverage is not a “plan” that was
“established or maintained” by Qinetiq, and (2) the
Supplemental Coverage is excluded from the scope of ERISA
by virtue of a regulatory safe harbor. We conclude that the
first contention is without merit and that the Supplemental
Coverage, as part of Qinetiq’s broader benefits plan, is
governed by ERISA.

A.

ERISA applies to “any employee benefit plan if it is
established or maintained . . . by any employer engaged in
commerce.” 29 U.S.C. § 1003(a). ERISA defines an
employee welfare benefit plan as “any plan, fund, or program
which was heretofore or is hereafter established or maintained
by an employer or by an employee organization, or by both,
to the extent that such plan, fund, or program was established
or is maintained for the purpose of providing [certain
benefits] for its participants or their beneficiaries, through the
purchase of insurance or otherwise.” 29 U.S.C. § 1002(1).
An ERISA plan “‘is established if from the surrounding
circumstances a reasonable person can ascertain [1] the
intended benefits, [2] a class of beneficiaries, [3] the source
of financing, and [4] procedures for receiving benefits.’”
Shaver v. Siemens Corp., 670 F.3d 462, 475 (3d Cir. 2012)
(quoting Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th
Cir. 1982) (en banc)). The “crucial factor” in determining
whether a “plan” has been established is “whether the
employer has expressed an intention to provide benefits on a

8
regular and long-term basis.” Gruber v. Hubbard Bert Karle
Weber, Inc., 159 F.3d 780, 789 (3d Cir. 1998).
One of the touchstones of a plan that is governed by
ERISA is the “establishment and maintenance of a separate
and ongoing administrative scheme,” which the plan
administrator must set up in order to determine eligibility for
benefits. Shaver, 670 F.3d at 476 (citing Angst v. Mack
Trucks, Inc., 969 F.2d 1530, 1538 (3d Cir. 1992)). This
feature derives from the Supreme Court’s decision in Fort
Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987), in
which the Court held that ERISA preemption was designed
“to afford employers the advantages of a uniform set of
administrative procedures governed by a single set of
regulations,” in situations where there exists an “ongoing
administrative program to meet the employer’s obligation.”
An administrative scheme “‘may arise where the employer, to
determine the employee’s eligibility for and level of benefits,
must analyze each employee’s particular circumstances in
light of the [policy’s] criteria.’” Shaver, 670 F.3d at 477
(quoting Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d
254, 257 (8th Cir. 1994)).

Given the circumstances outlined in the plaintiffs’
complaint, Qinetiq “established and maintained” the
Supplemental Coverage within the meaning of ERISA. It is
undisputed that the Supplemental Coverage was governed by
the same Booklets and SPDs as the Basic Policies. These
documents quite clearly outlined the intended benefits (see
App. 512-13, 571-73, describing the amount and frequency of
benefit payments), the class of beneficiaries (see App. 512,
517-18, 575-76, describing who is eligible to become
insured), the source of financing (see App. 513, 573,
informing employees that Qinetiq paid all of the premiums
for the basic Long Term Disability and basic Accidental
Death and Dismemberment policies, but that employees must
contribute to receive other coverage), and the procedures for
receiving benefits (see App. 553-56, 621-24, detailing each
policy’s “claim procedures”).

The portion of the SPDs that details “claim
procedures” indicates that there existed a comprehensive
administrative scheme for determining eligibility for benefits
after an employee filed a claim. The SPDs each promised

9
that Prudential would notify a claimant regarding a
determination of eligibility for benefits within forty-five days
of filing a claim. The criteria for eligibility were exhaustively
set out in the Booklets. If a claim were denied, Prudential
promised to inform the employee in writing of the specific
reason for the denial, whether the denial could be cured, and
the procedures for appealing the denial. This administrative
scheme clearly evidences Qinetiq’s “intention to provide
benefits on a regular and long-term basis.” Gruber, 159 F.3d
at 789. Qinetiq therefore “established and maintained” the
Basic Policies and Supplemental Coverage, which operated as
a single plan, within the meaning of ERISA.

B.

Although the Basic Policies indisputably were
governed by ERISA, the plaintiffs argue that the
Supplemental Coverage ought to be “unbundled” and
analyzed separately. They contend that if the Supplemental
Coverage is viewed separately, then the Supplemental
Coverage is not a welfare benefit plan that is governed by
ERISA because of a regulatory safe harbor that excludes
certain “programs.” See 29 C.F.R. § 2510.3-1(j). The
plaintiffs, however, point to no authority that would suggest
that closely related components of an overarching welfare
benefit plan ought to be unbundled, and in the circumstances
presented here, there are several compelling reasons not to do
so.

All of the characteristics of the Basic Policies and
Supplemental Coverage indicate that they are not two
separate sources of coverage, but two parts of one broader
benefits plan. All of the Basic Policies and Supplemental
Coverage were governed by a single group contract between
Qinetiq and Prudential. All of the information regarding
benefit terms, rules, exclusions, and claim procedures for the
Basic Policies and Supplemental Coverage were the same and
contained in the same documents; Qinetiq did not issue
separate Booklets and SPDs for the Supplemental Coverage.
If an employee wanted to know, for example, the procedure
for filing a claim, he would look in only one place, and then
file only one claim. Purchasing the Supplemental Coverage

10
merely bestowed a higher level of benefits pursuant to the
same terms.
Viewing the Basic Policies and Supplemental
Coverage as two parts of a broader whole is consistent with
ERISA’s policy goals. One of the statute’s principal aims is
to avoid subjecting regulated entities to conflicting sources of
substantive law. N.Y. State Conference of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656-57
(1995). Such uniform regulation “is impossible . . . if plans
are subject to different legal obligations in different States.”
Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 148
(2001). Making different parts of a single, integrated plan
subject to differing legal regimes could actually deter
employers from offering such additional coverage in the first
place. Conkright v. Frommert, 559 U.S. 506, 517 (2010).

Accordingly, we hold that the Supplemental Coverage
cannot be unbundled from the Basic Plans. In so holding, we
join every Court of Appeals to have considered whether to
unbundle closely related components of an employer’s
broader ERISA benefits plan and declined to do so. For
example, in Gross v. Sun Life Assurance Co. of Canada, 734
F.3d 1 (1st Cir. 2013), the plaintiff’s employer paid all of its
employees’ premiums for life and accidental death and
dismemberment insurance, but employees paid all of their
own premiums for optional long term disability coverage. Id.
at 4. After the plaintiff’s insurance company denied her
coverage under the long term disability policy, she brought
numerous state law claims against the carrier responsible for
the long term disability policy. The district court held that
her claims with respect to the long term disability policy were
preempted and the Court of Appeals for the First Circuit
affirmed. The Court of Appeals viewed the long term
disability policy as part of a “comprehensive employee
benefit plan” that the employer offered its employees. Id. at 7
(quotation marks omitted). The court noted that the employer
offered all three policies pursuant to the same group contract
with its insurer, and the benefits, rules, exclusions, and claim
procedures were covered by the same plan documents. Id. at
8. It held that because a “‘plan’ under ERISA may embrace
one or more policies,” there was “no justification for isolating
the long-term disability policy from [the employer’s]
insurance package.” Id.; see also Sgro v. Danone Waters of

11
N. Am., Inc., 532 F.3d 940, 943 (9th Cir. 2008) (“So long as
[the employer] pays for some benefits, ERISA applies to the
whole plan, even if employees pay entirely for other
benefits.”); Postma v. Paul Revere Life Ins. Co., 223 F.3d
533, 538 (7th Cir. 2000) (“For purposes of determining
whether a benefit plan is subject to ERISA, its various aspects
ought not be unbundled.”); Gaylor v. John Hancock Mut. Life
Ins. Co., 112 F.3d 460, 463 (10th Cir. 1997) (refusing to sever
optional insurance coverage that “was a feature of the Plan,
notwithstanding the fact that the cost of such coverage had to
be contributed by the employee”); Glass v. United of Omaha
Life Ins. Co., 33 F.3d 1341, 1345 (11th Cir. 1994) (“The
Elect Life feature is part and parcel of the whole group
insurance plan and thus ERISA governs it.”).

Because the Supplemental Coverage cannot be
unbundled from the Basic Policies here, the regulatory safe
harbor cannot save the plaintiffs’ state law claims. See Gross,
734 F.3d at 10 (“Our rejection of [the plaintiff’s] assumption
that [the employer] provided multiple, independent plans is
fatal to her safe harbor argument.”); accord Sgro, 532 F.3d at
942-43; Gaylor, 112 F.3d at 463; Glass, 33 F.3d at 1345. The
safe harbor provides that “a group or group-type insurance
program offered by an insurer to employees or members of an
employee organization” is not considered an ERISA plan, but
rather a non-ERISA “program” if the following requirements
are met:

(1) No contributions are made by an employer
or employee organization;
(2) Participation [in] the program is completely
voluntary for employees or members;
(3) The sole functions of the employer or
employee organization with respect to the
program are, without endorsing the program,
to permit the insurer to publicize the
program to employees or members, to
collect premiums through payroll deductions
or dues checkoffs and to remit them to the
insurer; and
(4) The employer or employee organization
receives no consideration in the form of cash
or otherwise in connection with the

12
 program, other than reasonable
compensation, excluding any profit, for
administrative services actually rendered in
connection with payroll deductions or dues
checkoffs.

29 C.F.R. § 2510.3-1(j). Group programs must meet all four
criteria to be exempted from ERISA. See Stuart v. UNUM
Life Ins. Co. of Am., 217 F.3d 1145, 1153 (9th Cir. 2000)
(collecting authority).

It is undisputed that Qinetiq paid the premiums for the
Basic Policies and that it automatically enrolled the plaintiffs
in basic coverage merely because they were employees. The
plaintiffs thus fail to meet the first two of the four criteria that
must all apply in order for the safe harbor to carve out a
“program” from ERISA’s otherwise expansive “uniform
regulatory regime.” Aetna Health Inc. v. Davila, 542 U.S.
200, 208 (2004).

IV.

Having concluded that ERISA governs the
Supplemental Coverage, we must now examine whether the
specific causes of action asserted by the plaintiffs are
preempted by ERISA’s “expansive pre-emption provisions.”
Id. ERISA possesses “extraordinary pre-emptive power.”
Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987).
Congress hoped that consolidating regulation and decision-
making with respect to covered plans in the federal sphere
would promote uniform administration of benefit plans and
avoid subjecting regulated entities to conflicting sources of
substantive law. Travelers Ins., 514 U.S. at 657. Congress
intended to “minimize the administrative and financial
burden” imposed on regulated entities, Ingersoll-Rand Co. v.
McClendon, 498 U.S. 133, 142 (1990), and to expand
employers’ provision of benefits in light of the more
“predictable set of liabilities,” Rush Prudential HMO, Inc. v.
Moran, 536 U.S. 355, 379 (2002).

Two variants of ERISA preemption are relevant to this
appeal. The first is express preemption under ERISA §
514(a). ERISA’s express preemption provision provides that

13
ERISA’s regulatory structure “shall supersede any and all
State laws insofar as they may now or hereafter relate to any
employee benefit plan [subject to ERISA].” 29 U.S.C. §
1144(a).5 “Relate to” has always been given a broad,
common-sense meaning, such that a state law “‘relates to’ an
employee benefit plan, in the normal sense of the phrase, if it
has a connection with or reference to such a plan.” Shaw v.
Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). “State law”
includes “all laws, decisions, rules, regulations, or other State
action having the effect of law, of any State,” 29 U.S.C. §
1144(c)(1), and is “not limited to state laws specifically
designed to affect employee benefit plans,” Pilot Life Ins. Co.
v. Dedeaux, 481 U.S. 41, 47-48 (1987) (quotation marks
omitted). In determining whether a claim “relates to” an
ERISA plan, we must also consider “the objectives of the
ERISA statute as a guide to the scope of the state law that
Congress understood would survive” preemption. Cal. Div.
of Labor Standards Enforcement v. Dillingham Constr., N.A.,
Inc., 519 U.S. 316, 325 (1997) (quotation marks omitted).
State common law claims, including those raised here,
routinely fall within the ambit of § 514. See Ingersoll-Rand,
498 U.S. at 140; Nat’l Sec. Sys., Inc. v. Iola, 700 F.3d 65, 83
(3d Cir. 2012).

Some of the plaintiffs’ claims also implicate conflict
preemption.6 Congress intended for the causes of action and
remedies available under ERISA § 502 to be the exclusive

5
The parties do not contend that either ERISA’s “savings
clause,” § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), which
exempts state laws that regulate insurance, banking, or
securities, or its “deemer clause,” § 514(b)(2)(B), 29 U.S.C. §
1144(b)(2)(B), which makes clear that a state law that
regulates insurance, banking, or securities cannot deem an
employee benefit plan to be an insurance company, applies,
and neither does.
6
The District Court also analyzed the plaintiffs’ claims under
“complete preemption.” App. 804-05. Complete preemption
is a “jurisdictional concept,” not a substantive concept
governing which law is applicable, like express or conflict
preemption. In re U.S. Healthcare, Inc., 193 F.3d 151, 160
(3d Cir. 1999). There is no dispute over subject matter
jurisdiction in this suit, which is proper.
14
vehicles for actions by ERISA plan participants asserting
improper plan administration. Pilot Life, 481 U.S. at 54. A
claim is conflict preempted by § 502 when it “duplicates,
supplements, or supplants the ERISA civil enforcement
remedy.” Aetna Health, 542 U.S. at 209. Section 502 bars
any claim that “provides a form of ultimate relief in a judicial
forum that add[s] to the judicial remedies provided by
ERISA.” Barber v. UNUM Life Ins. Co. of Am., 383 F.3d
134, 140 (3d Cir. 2004) (quotation marks omitted).

The plaintiffs’ claims fall into three broad categories:
(1) common law fraud, misrepresentation, and violation of the
New Jersey CFA; (2) breach of contract, breach of the
implied covenant of good faith and fair dealing, and breach of
fiduciary duty; and (3) punitive damages.7 In the
circumstances presented here, ERISA preempts all three sets
of claims.8

A.

The plaintiffs’ claims for common law fraud,
misrepresentation, and violation of the New Jersey CFA
relate to the plaintiffs’ ERISA plan because they are premised
on the existence of the plan and require interpreting the plan’s
terms. In order to state a claim for common law fraud, a
plaintiff must claim that the defendant made a material
misrepresentation. See Banco Popular N. Am. v. Gandi, 876
A.2d 253, 260 (N.J. 2005). The contours of a CFA violation
are similar in that the plaintiff must claim that the defendant
engaged in unlawful conduct that includes employing a

7
The plaintiffs’ complaint also alleged violations of the New
Jersey TCCWNA, which prohibits misleading contracts, and
violations of statutory consumer fraud laws of every state
(except Ohio) and the District of Columbia. App. 49, 55-61.
The plaintiffs do not challenge the dismissal of these claims
on appeal. Therefore, they have waived any arguments they
had related to these laws. See Sharp v. Johnson, 669 F.3d
144, 152 n.10 (3d Cir. 2012).
8
Because we hold that ERISA preempts all of the plaintiffs’
claims, we need not reach the District Court’s alternative
conclusion that the plaintiffs’ claims were also preempted by
the DBA.
15
misrepresentation or omitting a material fact. See N.J. Stat.
Ann. § 56:8-2; see also Manahawkin Convalescent v. O’Neill,
85 A.3d 947, 960 (N.J. 2014). The plaintiffs’ contention here
is that the defendants “deliberately concealed material facts
regarding the [Supplemental Coverage], including but not
limited to: (1) the [Supplemental Coverage] did not provide
disability benefits in the event Plaintiffs and members of the
Class were injured in Iraq and/or Afghanistan; [and] (2)
Defendant Prudential would deny the disability claims of
Plaintiffs and members of the Class based upon the war
exclusion in the [Supplemental Coverage].” App. 21
(Complaint ¶ 35).

Resolving these allegations would require a court to
assess the defendants’ “representations in light of the
plaintiffs’ benefits and rights under the plans.” Iola, 700 F.3d
at 84. When the plaintiffs decided to pay additional
premiums to enroll in the Supplemental Coverage, they
(rightly or wrongly) thought that the policies would cover
them in a certain set of circumstances. The war exclusions
reduced the set of covered circumstances. Determining
whether the coverage was of negligible value involves
determining the set of covered circumstances, which involves
reference to the war exclusion, which is part of the policy.
“This type of analysis — concerning the accuracy of
statements . . . to plan participants in the course of
administering the plans — sits within the heartland of
ERISA,” and ERISA expressly preempts these claims. Id.
Courts have routinely held that claims like these that sound in
fraud are expressly preempted by ERISA. See Pilot Life, 481
U.S. at 47 (fraudulent inducement claim preempted by
ERISA); Iola, 700 F.3d at 84 (claims for misrepresentations
about commissions and size of reserve fund preempted
because they were premised on the existence of the ERISA
plans); Berger v. Edgewater Steel Co., 911 F.2d 911, 923 (3d
Cir. 1990) (misrepresentation claim premised on a deceptive
statement in a letter regarding plan amendments preempted
because the letter related to the ERISA plan).9

9
The same is true of the CFA claim. Other Courts of
Appeals have held that similar consumer fraud statutes are
also expressly preempted by ERISA. See, e.g., Paneccasio v.
Unisource Worldwide, Inc., 532 F.3d 101, 114 (2d Cir. 2008)
16
 The plaintiffs attempt to circumvent this barrier by
arguing that their claims relate to an unstated policy or
practice of automatically denying claims based on the war
exclusion clauses even in situations where the exclusions
should not apply. However, this is still a claim that is about
the benefits owed and is expressly preempted by ERISA. The
plaintiffs ignore that proving this claim will require reference
to plan documents to determine what each policy covers, and
then examining Prudential’s claims administration processing
and procedures in light of the plan’s contours. In essence,
they allege that Prudential was consistently making improper
benefit determinations. Where liability is predicated on a
plan’s administration, ERISA preempts state law claims
because “a benefit determination is part and parcel of the
ordinary fiduciary responsibilities connected to the
administration of a plan.” Aetna Health, 542 U.S. at 219; see
also Kollman v. Hewitt Assocs., LLC, 487 F.3d 139, 150 (3d
Cir. 2007) (determining whether erroneous benefits
calculation was malpractice would require consulting what
benefits the plan provides and was thus preempted).

B.

The plaintiffs’ claims for breach of contract, breach of
the implied covenant of good faith and fair dealing, and
breach of fiduciary duty10 are likewise expressly preempted
because they also relate to the administration of the ERISA

(claim under the Connecticut Unfair Trade Practices Act
concerning improper denial of benefits related to the plan and
was preempted); Anderson v. Humana, Inc., 24 F.3d 889, 891
(7th Cir. 1994) (application of Illinois’s consumer protection
law to representations made in documents regulated by
ERISA plan was preempted). A number of district courts in
this Circuit have also held that the New Jersey CFA is
expressly preempted. See, e.g., Beye v. Horizon Blue Cross
Blue Shield of N.J., 568 F. Supp. 2d 556 (D.N.J. 2008).
10
The plaintiffs brought their claim for state law breach of
fiduciary duty in their amended complaint. See App. 496.
The District Court denied the plaintiffs’ motion for leave to
amend the complaint as futile because this breach of fiduciary
duty claim — the only claim that the plaintiffs sought to add
— was preempted. For the reasons stated herein, we agree.
17
plans. To prove breach of contract, a contract must have
existed. See Sheet Metal Workers Int’l Ass’n Local Union
No. 27, AFL-CIO v. E.P. Donnelly, Inc., 737 F.3d 879, 900
(3d Cir. 2013). The plaintiffs specifically allege that the
contracts that the defendants purportedly breached were the
insurance policies they purchased. See App. 50 (Complaint ¶
171). The defendants owed the plaintiffs fiduciary duties
only on account of these agreements.

These claims again relate to the improper denial of
benefits because of the war exclusion clause. Claims
involving denial of benefits or improper processing of
benefits require interpreting what benefits are due under the
plan. Because these claims explicitly require reference to the
plan and what it covers, they are expressly preempted. See
Pilot Life, 481 U.S. at 47-48 (breach of contract claim
expressly preempted); accord Pane v. RCA Corp., 868 F.2d
631, 635 (3d Cir. 1989).

C.

The plaintiffs’ claim for punitive damages is conflict
preempted by ERISA’s exclusive civil remedy scheme in §
502(a). As we have previously held, the Supreme Court’s
decision in “Aetna Health confirms that conflict preemption
applies to any ‘state cause of action that provides an
alternative remedy to those provided by the ERISA civil
enforcement mechanism’ because such a cause of action
‘conflicts with Congress’ clear intent to make the ERISA
mechanism exclusive.’” Barber, 383 F.3d at 140 (quoting
Aetna Health, 542 U.S. at 214 n.4). Congress did not make
punitive damages available under ERISA. “The policy
choices reflected in the inclusion of certain remedies and the
exclusion of others under the federal scheme would be
completely undermined if ERISA-plan participants and
beneficiaries were free to obtain remedies under state law that
Congress rejected in ERISA.” Pilot Life, 481 U.S. at 54.
Because Congress did not choose to include punitive damages
as an available remedy, ERISA § 502(a) conflicts with and
preempts the plaintiffs’ state law claim. See Pane, 868 F.2d

18
at 635 & n.2 (ERISA preempted claim for punitive
damages).11
V.

For the foregoing reasons, we will affirm the order of
the District Court dismissing the plaintiffs’ complaint for
failure to state a claim and denying leave to file an amended
complaint.

11
The plaintiffs also argue that their state law claims are not
preempted because another remedy they seek — return of
premiums — is not available under ERISA. This argument
conflates potential remedies with causes of action, and is also
irrelevant. Any state laws that supplement the remedies
available under ERISA conflict with the “clear congressional
intent to make the ERISA remedy exclusive.” Aetna Health,
542 U.S at 209. Furthermore, this kind of relief may well be
available under ERISA § 502(a). The Supreme Court
recently held, albeit in a different context, that “other
appropriate equitable relief” in § 502(a)(3) may consist of
“monetary compensation for a loss resulting from a trustee’s
breach of duty, or to prevent the trustee’s unjust enrichment.”
CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1880 (2011)
(quotation marks omitted). Several Courts of Appeals have
held that the remedy of return of premiums is available under
ERISA § 502(a). See, e.g., Kenseth v. Dean Health Plan,
Inc., 722 F.3d 869, 882 (7th Cir. 2013); McCravy v. Metro.
Life Ins. Co., 690 F.3d 176, 182-83 (4th Cir. 2012);
Amschwand v. Spherion Corp., 505 F.3d 342, 348 (5th Cir.
2007); Callery v. U.S. Life Ins. Co. in City of New York, 392
F.3d 401, 407 (10th Cir. 2004).
19