Frances Darcangelo v.  Verizon Communications, Incorporated; Core, Incorporated

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 FRANCES DARCANGELO,
Plaintiff-Appellant,
v.
No. 01-1679  VERIZON COMMUNICATIONS,
INCORPORATED; CORE,
INCORPORATED,
Defendants-Appellees. 
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, Chief District Judge.
(CA-01-45)
Argued: January 23, 2002
Decided: May 28, 2002
Before LUTTIG, MICHAEL, and KING, Circuit Judges.
Affirmed in part, reversed in part, and remanded by published opin-
ion. Judge Michael wrote the opinion, in which Judge Luttig and
Judge King joined.
COUNSEL
ARGUED: Edwin R. Burkhardt, Jr., Towson, Maryland, for Appel-
lant. Karen Mary Wahle, O’MELVENY & MYERS, L.L.P., Wash-
ington, D.C., for Appellee Verizon; M. Natalie McSherry,
WHITEFORD, TAYLOR & PRESTON, L.L.P., Baltimore, Mary-
land, for Appellee CORE.

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OPINION
MICHAEL, Circuit Judge:
Frances Darcangelo filed this case in Maryland state court against
Verizon Communications, Inc., her employer, and CORE, Inc., the
administrator of a disability benefits plan that Verizon sponsors for its
employees. Darcangelo’s complaint alleges violations of Maryland’s
medical record confidentiality statute, Md. Code Ann., Health-
General §§ 4-302 and 4-307, and the state’s unfair and deceptive trade
practices statute, Md. Code Ann., Comm. Law §§ 13-301 and 13-303.
Claims for invasion of privacy, negligence, and breach of contract are
also included.1 The nub of Darcangelo’s complaint is that CORE, act-
ing as the agent of Verizon, solicited and disseminated Darcangelo’s
private medical information in order to assist Verizon in its efforts to
declare Darcangelo a "direct threat" to her coworkers so that she
could be fired. Darcangelo, in other words, says that CORE did not
obtain or disseminate her medical information for any appropriate
purpose. Verizon filed a notice of removal, and the district court
determined that removal was proper because Darcangelo’s claims
were completely preempted by the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. The court
then dismissed all of Darcangelo’s claims as preempted. We affirm
only the dismissal of Darcangelo’s breach of contract claim. The
remaining four claims, relating to the confidentiality of medical
records, unfair trade practices, privacy, and negligence, cannot be dis-
posed of on preemption grounds at the motion to dismiss stage. This
is because the complaint, in setting forth these four claims, charges
CORE with conduct that is entirely unrelated to its duties under the
ERISA plan. We therefore reverse the district court’s dismissal of the
four claims and remand the case for further proceedings.
1Darcangelo filed her original complaint on October 27, 2000, and an
amended complaint on December 4, 2000, before service of process. For
the sake of brevity, we use "complaint" to refer to the amended com-
plaint.
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I.
Because the preemption questions in this case are intertwined with
the question of federal jurisdiction, we briefly discuss the basis of the
district court’s removal jurisdiction. In general, an action filed in state
court may be removed to federal court "only if it might have been
brought in [federal court] originally." 14B Wright, Miller & Cooper,
Federal Practice & Procedure: Jurisdiction § 3721, at 292 (3d ed.
1998). See also 28 U.S.C. § 1441. The district court, after concluding
that Darcangelo’s complaint raised federal claims under ERISA,
determined that it had jurisdiction based on the presence of a federal
question. Under the well-pleaded complaint rule, courts "ordinarily
. . . look no further than the plaintiff’s complaint in determining
whether a lawsuit raises issues of federal law capable of creating
federal-question jurisdiction under 28 U.S.C. § 1331." Custer v.
Sweeney, 89 F.3d 1156, 1165 (4th Cir. 1996). Darcangelo’s com-
plaint, filed in Maryland state court, appears to rely only on state law.
The district court determined, however, that all of Darcangelo’s
claims were preempted by ERISA and that both removal and dis-
missal were appropriate.
In considering the district court’s jurisdiction over Darcangelo’s
complaint, we must distinguish between ordinary conflict preemption
and complete preemption. Under ordinary conflict preemption, state
laws that conflict with federal laws are preempted, and preemption is
asserted as "a federal defense to the plaintiff’s suit. As a defense, it
does not appear on the face of a well-pleaded complaint, and, there-
fore, does not authorize removal to federal court." Metropolitan Life
Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). ERISA § 514 expressly
states the scope of ordinary conflict preemption under ERISA: state
laws are superseded insofar as they "relate to" an ERISA plan. 29
U.S.C. § 1144(a). Thus, when presented with claims under state law
that are said to implicate ERISA, a court (be it state or federal) must
determine whether the claims are preempted by ERISA § 514. But
"ERISA pre-emption [of a state claim], without more, does not con-
vert a state claim into an action arising under federal law." Taylor,
481 U.S. at 64. Thus, when ERISA is simply asserted as a defense to
a state law claim, the state claim is not converted into a federal claim,
and there is no federal question giving rise to removal jurisdiction.
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In the case of complete preemption, however, Congress "so com-
pletely pre-empt[s] a particular area that any civil complaint raising
this select group of claims is necessarily federal in character." Taylor,
481 U.S. at 63-64. That is to say, the doctrine of complete preemption
"converts an ordinary state common law complaint into one stating a
federal claim." Id. at 65. Thus, the doctrine of complete preemption
serves as a corollary to the well-pleaded complaint rule: because the
state claims in the complaint are converted into federal claims, the
federal claims appear on the face of the complaint. Id. at 63-65. The
Supreme Court has determined that ERISA’s civil enforcement provi-
sion, § 502(a) (29 U.S.C. § 1132(a)), completely preempts state law
claims that come within its scope and converts these state claims into
federal claims under § 502. Id. at 65-66. Thus, when a complaint con-
tains state law claims that fit within the scope of ERISA’s § 502 civil
enforcement provision, those claims are converted into federal claims,
and the action can be removed to federal court.
As explained in greater detail in part II, we conclude that four of
Darcangelo’s claims, as currently alleged in her complaint, are neither
preempted by ERISA nor transformed into ERISA § 502 claims.
Thus, these four claims are not federal in nature and do not them-
selves give rise to federal jurisdiction. Darcangelo’s fifth claim, for
breach of contract, is completely preempted and is transformed into
a federal claim under ERISA § 502. The contract claim, then, gives
rise to federal question jurisdiction, and the removal to federal court
was proper. Because federal jurisdiction exists for the contract claim,
the district court also had supplemental jurisdiction under 28 U.S.C.
§ 1367 over Darcangelo’s non-preempted state law claims. Accord-
ingly, the district court’s exercise of jurisdiction over the complaint
was proper.2
2Verizon’s notice of removal, which was filed with CORE’s consent,
also asserted federal jurisdiction based on diversity of citizenship. After
removal Darcangelo filed motions (1) to amend her complaint to add
non-diverse parties and (2) to remand the action to state court for lack
of subject matter jurisdiction. Verizon and CORE argued that the motion
to amend the complaint should be denied on the ground that the amend-
ment was sought to add parties for the sole purpose of defeating federal
jurisdiction. See 28 U.S.C. § 1447(e). Because the district court con-
cluded that it had federal question jurisdiction, it denied Darcangelo’s
motion to remand without considering the issues relating to the question
of diversity jurisdiction.
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II.
Darcangelo argues that under the rules of ordinary conflict preemp-
tion, ERISA does not preempt the state law claims alleged in her
complaint. In this part we address Darcangelo’s first four claims as
a group because the same preemption analysis applies to all of them.
(These are the claims alleging negligence, invasion of privacy, viola-
tion of Maryland’s medical record confidentiality statute, and viola-
tion of the state’s unfair and deceptive trade practices statute.) Briefly
stated, our conclusion with respect to the first four claims is as fol-
lows. If CORE obtained Darcangelo’s medical information in the
course of processing a benefits claim or in the course of performing
any of its administrative duties under the plan, these claims would be
"related to" the ERISA plan under § 514 and would therefore be pre-
empted. If, on the other hand, CORE was not performing any of its
duties as plan administrator, but obtained the information solely to
assist Verizon in establishing that Darcangelo posed a threat to her
coworkers, then Darcangelo’s first four claims would not be related
to the plan. Reading the complaint in the light most favorable to Dar-
cangelo, we conclude that she alleges conduct by CORE that is not
related to its duties under the plan. Accordingly, Darcangelo’s first
four claims are not related to the plan and therefore are not pre-
empted. Darcangelo’s fifth claim, for breach of contract, merits a
somewhat different analysis, so we will address it separately in part
III.
A.
In her complaint Darcangelo bases her first four claims on the alle-
gation that CORE, acting as Verizon’s agent and without Darcan-
gelo’s consent, "either improperly disseminated to or solicited from"
her medical providers "personal and confidential information" about
her "mental health condition and treatment." She further alleges that
CORE did not have any justification for seeking this information and
that CORE did not make any "appropriate use of th[e] information;"
rather, CORE was assisting Verizon in its attempt "to have Plaintiff
declared a ‘direct threat’ under the ADA so [Verizon] could terminate
her." (Presumably, Darcangelo is suggesting that Verizon planned to
fire her but feared liability under the Americans with Disabilities Act
of 1990 (ADA), 42 U.S.C. § 12101 et seq. If that was Verizon’s fear,
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it would have had an affirmative defense against an ADA discrimina-
tion claim if it could have proven that Darcangelo posed a "direct
threat," specifically, "a significant risk to the health or safety of others
that [could not] be eliminated by reasonable accommodation," 42
U.S.C. § 11211(3). See 42 U.S.C. § 12113(b).) Simply put, we read
Darcangelo’s complaint as alleging that CORE solicited her private
medical information for the sole purpose of helping Verizon establish
that she posed a sufficient threat to her coworkers to warrant her dis-
charge.
After the case was removed, both Verizon and CORE filed motions
to dismiss. Verizon argued that all of the complaint’s allegations of
wrongful conduct by Verizon and CORE "arise[ ] out of the provision
of or administration of . . . ‘medical-related care and services’ to
plaintiff." Similarly, CORE argued that the allegations "go to its
actions with regard to handling of medical or mental health informa-
tion obtained in its capacity of administering [Verizon’s] employee
welfare plans." The district court accepted the defendants’ version of
the facts, stating that "the actions complained of in th[is] case . . .
grew directly out of[ ] the defendants’ administration of an ERISA
plan, involving the use of medical records in connection with the pro-
vision of benefits relating to medical care to the plaintiff." The defen-
dants’ assertion, which the district court accepted, that the conduct in
question arises out of the administration of an ERISA plan might well
turn out to be true. But at the motion to dismiss stage, a court must
accept the allegations of the complaint as true and view the complaint
in the light most favorable to the plaintiff. GE Investment Private
Placement Partners II v. Parker, 247 F.3d 543, 548 (4th Cir. 2001).
Here, it is not apparent from Darcangelo’s complaint that the conduct
charged had anything to do with administering the employee benefits
plan. Indeed, Darcangelo alleges that CORE’s solicitation of her med-
ical information from third parties was not justified by any purpose
that would result in legitimate use of the information. This allegation
suggests that CORE did not seek the information in the course of pro-
viding benefits to Darcangelo or performing any of its duties under
the ERISA plan.
As Verizon’s counsel said in oral argument, "the key [question]
here is whether the conduct complained of in the plaintiff’s complaint
is conduct undertaken by CORE in the performance of its plan admin-
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istration fiduciary duties for an ERISA plan." The answer to this
question is precisely what we do not know at this stage of the case,
given the absence of any factual record. Indeed, there appear to be
substantially differing views among Darcangelo, Verizon, and CORE
about what actually did occur. The district court said that Darcangelo
"made a claim for benefits at some point under the plan," but there
is no allegation to this effect in the complaint, and there is no record
to support this factual conclusion. At oral argument Verizon’s counsel
represented that there had been a claim for benefits. In contrast,
CORE’s counsel said that no claim for benefits had been made.
CORE’s counsel suggested that information might have been sought
at Verizon’s request, not because of a pending disability claim by
Darcangelo, but because "questions [about] disability can arise from
the employer as well as from the employee if there’s a disability that
affects the employee in the workplace." CORE’s suggestion (as far as
it goes) about what might have happened is not inconsistent with Dar-
cangelo’s allegation that the information was not sought in connection
with claim processing or any other type of plan administration, but
that it was sought solely to determine whether Darcangelo was subject
to discharge because she posed a direct threat in the workplace. We
are not saying that CORE has conceded the substance of Darcangelo’s
allegations. It is entirely possible that formal factual development will
reveal that CORE’s conduct, even if not related to a pending benefits
claim by Darcangelo, was authorized by the plan. We have noted the
three parties’ versions of what happened only to illustrate that the rel-
evant facts are, at this point, very much in dispute.
The conflicting stories offered at oral argument confirm our assess-
ment that Darcangelo’s complaint cannot be read to say that CORE
obtained her medical information in the course of processing a bene-
fits claim or performing any of its other administrative duties under
the ERISA plan. Rather, the complaint, as we read it, makes factual
allegations that CORE obtained her medical information solely for
inappropriate ends. Because the case got no further than the motion
to dismiss stage, the question for us is simply whether Darcangelo’s
claims based on these factual allegations are preempted by ERISA.
B.
As noted above, ERISA’s express preemption provision, § 514,
states that ERISA supersedes all state laws insofar as they "relate to"
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an ERISA plan. The Supreme Court has recognized that an expansive
interpretation of the phrase "relate to" would mean that "for all practi-
cal purposes pre-emption would never run its course." New York State
Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,
514 U.S. 645, 655 (1995). Thus, as the Court put it, "[w]e simply
must go beyond the unhelpful text and the frustrating difficulty of
defining its key term, and look instead to the objectives of the ERISA
statute as a guide to the scope of the state law that Congress under-
stood would survive." Id. at 656. An examination of these objectives
led the Court to explain that "[t]he basic thrust of [ERISA’s] pre-
emption clause . . . was to avoid a multiplicity of regulation in order
to permit the nationally uniform administration of employee benefit
plans." Id. at 657. ERISA was intended to "‘protect . . . the interests
of participants in employee benefit plans and their beneficiaries, . . .
by establishing standards of conduct, responsibility, and obligation for
fiduciaries . . . and by providing for appropriate remedies, sanctions,
and ready access to the Federal courts.’" Coyne & Delany Co. v. Sel-
man, 98 F.3d 1457, 1470 (4th Cir. 1996) (quoting 29 U.S.C.
§ 1001(b)) (first alteration omitted). In light of these ERISA objec-
tives, the Supreme Court has explained that Congress intended to pre-
empt at least three categories of state law under § 514: (1) laws that
mandate employee benefit structures or their administration, (2) laws
that bind employers or plan administrators to particular choices or
preclude uniform administrative practices, and (3) laws that provide
alternative enforcement mechanisms to ERISA’s civil enforcement
provisions. Travelers, 514 U.S. at 658-59; see also Coyne & Delany,
98 F.3d at 1468. These three preemption categories are thus a guide
for determining whether a particular state law relates to an ERISA
plan.
We now consider whether Darcangelo’s first four claims are based
on Maryland state laws that fall under one of the three preemption
categories set forth above. (The Maryland laws implicated are, again,
those relating to negligence, invasion of privacy, the confidentiality
of medical records, and unfair and deceptive trade practices.) First, as
this list of the relevant Maryland laws indicates, Darcangelo’s claims
are not based on any state law that seeks to mandate the structure or
content of the ERISA plan or how it is administered. Specifically, her
claims for relief do not rely on any state law that dictates "the terms
of a plan or the type of benefits a plan may provide," imposes "report-
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ing, disclosure or funding requirements," or "affect[s] calculation of
benefits." Coyne & Delany, 98 F.3d at 1471. Second, Darcangelo’s
claims are not based on any state law that would bind the plan admin-
istrator to particular choices with respect to the plan or that would
preclude uniform administrative practices. Id. Because she alleges
conduct that is entirely outside the scope of plan administration, she
does not make any claim for relief that would regulate the structure
or process of plan administration. She does not, for example, seek
relief that would dictate how a plan administrator must process bene-
fit information, dictate who may have access to such information, or
limit the ability of the plan administrator to investigate benefit claims.
This leaves the question of whether Darcangelo’s first four claims
seek relief under state laws that provide alternative enforcement
mechanisms for claims that are actually ERISA claims. Id. ERISA’s
civil enforcement scheme is set out in § 502, 29 U.S.C. § 1132. A
state claim is an alternative enforcement mechanism for ERISA rights
if the state claim could be brought as an enforcement action under
§ 502. In this case, then, determining whether Darcangelo’s claims
are expressly preempted as relating to an ERISA plan under § 514
turns on whether her claims are alternative enforcement mechanisms
to ERISA § 502.3
3We explained in part I that it is important to distinguish between ordi-
nary conflict preemption and complete preemption. Under ordinary con-
flict preemption, a state law claim is preempted if it "relate[s] to" an
ERISA plan under § 514, but the claim is completely preempted only if
it fits within the scope of ERISA § 502. While the tests for the two cate-
gories of preemption are different, they sometimes overlap. Because the
"relate to" question in this case turns on whether Darcangelo’s claims are
alternative enforcement mechanisms to § 502, the conflict preemption
and complete preemption tests are the same here. To put it another way,
when a state law is completely preempted as an alternative enforcement
mechanism under § 502, it will also be "relate[d] to" an ERISA plan and
preempted under § 514. On the other hand, a state law that is preempted
under § 514 (conflict preemption) will not always be preempted under
§ 502 (complete preemption). For example, a law that mandates
employee benefit structures might not be completely preempted as an
alternative enforcement mechanism under § 502, but it would still be pre-
empted according to ordinary conflict preemption principles because it
is related to the ERISA plan under § 514.
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At first blush, it might appear that any claim by an ERISA plan
participant or beneficiary against the plan administrator would of
necessity be a claim for enforcement of ERISA rights that could be
asserted only as a federal claim under § 502. In many cases brought
by ERISA beneficiaries against their plan administrators, courts have
held state law claims to be preempted as alternative enforcement
mechanisms. See, e.g., Griggs v. E.I. duPont de Nemours & Co., 237
F.3d 371, 377-79 (4th Cir. 2001); Hampers v. W.R. Grace & Co., 202
F.3d 44 (1st Cir. 2000). Unlike this case, however, those cases
involved alleged misconduct by an administrator that was clearly
undertaken in the course of carrying out duties under a plan. Still, it
might be argued that any state claim by a beneficiary against the plan
administrator necessarily "‘implicate[s] the relations among the tradi-
tional ERISA plan entities’ . . . [such as] the plan fiduciaries and the
beneficiaries," Coyne & Delany, 98 F.3d at 1469 (quoting Sweeney,
89 F.3d at 1167), and that as a result the state claim should be pre-
empted. The Supreme Court has made clear, however, that many
"lawsuits against ERISA plans for run-of-the-mill state-law . . . torts
committed by [the] ERISA plan" are not preempted, even though
these suits "obviously affect[ ] and involv[e] ERISA plans and their
trustees." Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S.
825, 833 (1988) (citing, inter alia, Abofreka v. Alston Tobacco Co.,
341 S.E.2d 622 (S.C. 1986)).4 We conclude, therefore, that the simple
fact that a defendant is an ERISA plan administrator does not auto-
4A Ninth Circuit case, Dishman v. UNUM Life Ins. Co. of Am., 269
F.3d 974 (9th Cir. 2001), provides an example of a non-preempted state
tort claim that was asserted by an ERISA beneficiary against the plan
administrator. In that case the beneficiary brought an action for invasion
of privacy against the plan administrator, alleging that the administrator’s
claims investigator had wangled out personal information about the ben-
eficiary by, among other things, impersonating the beneficiary to third
parties, falsely claiming to be a bank loan officer, and misrepresenting
to the beneficiary’s neighbors that he had volunteered to coach a basket-
ball team. Id. at 979-80. The court rejected the idea that "a plan adminis-
trator could ‘investigate’ a claim in all manner of tortious ways with
impunity." Id. at 984. Because the beneficiary simply alleged "garden
variety torts which only peripherally impact daily plan administration,"
id., the court held that the state invasion of privacy law was not pre-
empted.
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matically insulate it from state law liability for alleged wrongdoing
against a plan participant or beneficiary.
We now consider specifically whether Darcangelo’s claims overlap
with any of the enforcement provisions available under ERISA § 502.
ERISA’s civil enforcement section, § 502, gives plan participants and
beneficiaries the right to sue to force disclosure of certain informa-
tion, to recover benefits due under the plan, to clarify the right to
future benefits, or to enforce rights under ERISA or the plan. 29
U.S.C. §§ 1132(a)(1)-(4). Darcangelo’s suit does not seek disclosure
of information, recovery of benefits, or clarification of her right to
future benefits; she seeks neither information nor benefits. The only
question is whether her claims are brought as an alternative means of
enforcing her rights under ERISA or the plan.
Verizon argues that Darcangelo’s claims are actually attempts to
enforce the fiduciary requirements of ERISA and of this ERISA plan.
Specifically, Verizon argues that her claims for relief seek to "define
fiduciary duties or address faulty plan administration." Coyne &
Delaney, 98 F.3d at 1471. We agree that if Darcangelo’s claims
sought to enforce the defendants’ fiduciary duties under the ERISA
plan, her claims would constitute alternative enforcement mechanisms
to § 502 and would therefore relate to the ERISA plan. ERISA § 404
requires that an ERISA fiduciary "shall discharge [its] duties with
respect to a plan solely in the interest of the participants and benefi-
ciaries." 29 U.S.C. § 1104(a)(1). Consistent with § 404, the short-term
disability plan here requires the plan administrator, in its fiduciary
capacity, "to see that the terms of the Plan are carried out for the
exclusive benefit of persons entitled to participate in the Plan." How-
ever, CORE’s solicitation of Darcangelo’s private medical informa-
tion for the sole purpose of helping Verizon determine whether she
posed enough of a threat to her coworkers to warrant her discharge
does not, as far as we can tell, have anything to do with CORE’s
duties with respect to the plan. If CORE’s alleged misconduct here is
not fiduciary conduct, then Darcangelo’s claims are not alternative
enforcement mechanisms to a § 502 breach of fiduciary duty action.
Generally speaking, an ERISA fiduciary is "any individual who de
facto performs specified discretionary functions with respect to the
management, assets, or administration of a plan." Sweeney, 89 F.3d
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at 1161 (summarizing ERISA’s definition of a fiduciary, 29 U.S.C.
§ 1002(21)(A)). Nevertheless, "[f]iduciary status under ERISA is not
an all-or-nothing concept." Id. at 1162 (quotations and citation omit-
ted). The same entity may function as an ERISA fiduciary in some
contexts but not in others. An entity involved with a benefit plan is
a fiduciary "only as to the activities which bring the [entity] within
the definition" of fiduciary under ERISA. Id. (quotations and citation
omitted).
The Supreme Court has made clear that misconduct by an entity
that sometimes acts as an ERISA fiduciary does not constitute a
breach of fiduciary duty just because the misconduct is aimed at a
plan participant or beneficiary. More specifically, a breach of fidu-
ciary duty is not established simply by demonstrating that (1) the
plaintiff is an ERISA participant or beneficiary, (2) the defendant is
(at least sometimes) an ERISA fiduciary, and (3) the defendant
wronged the plaintiff. Thus, "[i]n every case charging breach of
ERISA fiduciary duty . . . the threshold question is not whether the
actions of some person employed to provide services under the plan
adversely affected a plan beneficiary’s interest, but whether that per-
son was acting as a fiduciary (that is, was performing a fiduciary
function) when taking the action subject to complaint." Pegram v.
Herdrich, 530 U.S. 211, 226 (2000). In determining whether a defen-
dant was "performing a fiduciary function," the Court instructs us to
consider (1) whether the acts in question were like traditional fidu-
ciary decisions, which are typically "decisions about managing assets
and distributing property to beneficiaries," id. at 231; and (2) whether
treating these acts as fiduciary decisions under ERISA would lead to
the undesirable federalization of large swaths of state law, id. at 235-
36.
Pegram thus requires us to look at Darcangelo’s complaint and
determine "whether [the entity employed to provide services under
the plan] was acting as a fiduciary (that is, was performing a fiduciary
function) when taking the action subject to complaint." Id. at 226. If
Darcangelo is alleging that CORE, in the course of processing a bene-
fits claim or performing some other plan duty, improperly disclosed
her private medical information, this would be a claim for breach of
fiduciary duty under ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1), and
§ 502(a)(1)-(3), 29 U.S.C. § 1132(a)(1)-(3). Such a claim would
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amount to an allegation that CORE, in the course of acting as a fidu-
ciary, that is, in making decisions about "managing assets and distrib-
uting property to beneficiaries," Pegram, 503 U.S. at 231, had not
acted solely in the interests of the participants and beneficiaries, but
had acted in the competing interest of Verizon. This would be an
impermissible attempt to use state law to "define fiduciary duties or
address faulty plan administration," Coyne & Delany, 98 F.3d at
1471, and would thus constitute an alternative enforcement mecha-
nism to a breach of fiduciary duty claim under § 502.
As explained above, however, Darcangelo’s complaint alleges that
Verizon and CORE did not obtain this information in pursuit of a
legitimate or appropriate end. This amounts to an allegation that Veri-
zon and CORE undertook conduct that was entirely unrelated to and
outside of the scope of their duties under the plan or in carrying out
the terms of the plan. Darcangelo does not allege that CORE improp-
erly performed some traditional fiduciary function, such as "managing
assets" or "distributing property" under the plan. Pegram, 530 U.S. at
231. Nor does Darcangelo allege that CORE negligently "discharge[d
its] duties," § 404(a)(1), or negligently carried out the terms of the
plan. Rather, Darcangelo alleges conduct by CORE that is completely
unauthorized — conduct that was not undertaken in the course of car-
rying out its plan responsibilities. The complaint, in other words, does
not simply allege "faulty plan administration," Coyne & Delany, 98
F.3d at 1471; rather, it alleges improper conduct so unrelated to the
plan that it cannot be termed "plan administration" of any sort. If, as
Darcangelo alleges, CORE obtained her private medical information
solely at the behest of Verizon to assist Verizon in its attempt to find
a reason to discharge her, CORE was not acting in the course of mak-
ing a benefits determination or performing any other plan function.
The clear implication of these allegations is that CORE was not per-
forming a fiduciary function, but was simply behaving as a rogue
administrator, acting entirely outside the scope of its duties under the
plan.
The facts alleged in this case prompt us to borrow Pegram’s words:
our "doubt that Congress intended the category of fiduciary adminis-
trative functions to encompass" tortious conduct by a plan administra-
tor that is completely unrelated to its duties under the plan "hardens
into conviction when we consider the consequences that would follow
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from [the defendants’] contrary view." Pegram, 530 U.S. at 232.
Under the defendants’ view, ERISA administrators would enjoy blan-
ket immunity — at least from damages under state tort law — for any
manner of wrongful conduct aimed at plan participants and beneficia-
ries, regardless of how unrelated that conduct is to the ERISA plan.
We cannot imagine that Congress would have wanted such a result.
As our court has explained, state common law torts such as invasion
of privacy and negligence are traditional areas of state authority, and
"[f]ederalism concerns strongly counsel against imputing to Congress
an intent" to preempt large swaths of state law "absent some clearly
expressed direction." Sweeney, 89 F.3d at 1167.
ERISA, as its goals indicate, does not seek to preempt all state laws
that might apply to an ERISA plan administrator, but only those laws
that undermine the "nationally uniform administration of employee
benefit plans." Travelers, 514 U.S. at 657 (emphasis added). When an
ERISA plan administrator takes action entirely unrelated to the
administration of the plan, liability for that action does not threaten
the uniformity of plan administration. Likewise, while ERISA estab-
lishes "‘standards of conduct, responsibility, and obligation for fidu-
ciaries,’" Coyne & Delany, 98 F.3d at 1470 (quoting 29 U.S.C.
§ 1001(b)), it does not preempt general state laws covering non-
fiduciary acts unrelated to an ERISA plan. Finally, while Darcan-
gelo’s suit may in some way affect her relationship with CORE and
Verizon, it does not "implicate the relations among the traditional
ERISA plan entities" with respect to those entities’ ERISA functions.
Id. at 1469 (quoting Sweeney, 89 F.3d at 1167). Thus, Darcangelo’s
claims, as currently alleged in the complaint, "would not undermine
the congressional policies that underlie ERISA." Sweeney, 89 F.3d at
1167.
In sum, ERISA § 514 preempts all state laws that "relate to" an
ERISA plan. A state law relates to an ERISA plan if, among other
things, it provides an alternative enforcement mechanism to ERISA’s
civil enforcement provision, § 502. Section 502 gives plan partici-
pants and beneficiaries the right to sue to force disclosure of certain
information, to obtain benefits under the plan, or to enforce rights or
fiduciary requirements under ERISA or the plan. 29 U.S.C.
§§ 1132(a)(1)-(4). Here, the defendants argue that Darcangelo’s first
four claims are an attempt to enforce the fiduciary provisions of
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ERISA and the ERISA plan. We conclude, however, that CORE’s
alleged conduct here is not fiduciary conduct, but rather conduct
entirely unrelated to the discharge of its duties under the plan.
Accordingly, Darcangelo’s first four claims are not an attempt to
enforce her rights under ERISA or the ERISA plan and therefore are
not alternative enforcement mechanisms to § 502. Because these
claims are not alternative enforcement mechanisms for ERISA, they
do not rely on state laws that are related to an ERISA plan under
§ 514. As a result, these claims are not preempted, and we reverse the
order dismissing them.
III.
We now turn to Darcangelo’s fifth claim, her breach of contract
claim. Because the contract in question is an ERISA plan, this claim
is clearly preempted. ERISA § 502 permits plan participants to bring
an action to "enforce [the participant’s] rights under the terms of the
plan." 29 U.S.C. § 1132(a)(1)(B). Accordingly, an action to enforce
the terms of a contract, when that contract is an ERISA plan, is of
necessity an alternative enforcement mechanism for ERISA § 502 and
is therefore "relate[d] to" an ERISA plan and preempted by § 514. See
Aliff v. BP America Inc., 26 F.3d 486 (4th Cir. 1994); McMahon v.
Digital Equipment Corp., 162 F.3d 28, 38 (1st Cir. 1998).5 Because
Darcangelo’s breach of contract claim is an alternative enforcement
mechanism to § 502, it is also completely preempted — that is, trans-
formed into a federal claim. This means that removal was proper.
Nevertheless, when a claim under state law is completely pre-
empted and is removed to federal court because it falls within the
scope of § 502, the federal court should not dismiss the claim as pre-
5The parties do not dispute that the agreement alleged in Count V of
the complaint is an ERISA plan, although the complaint does not charac-
terize it as such. Darcangelo’s complaint refers to an agreement for
medical-related services between herself, Verizon, and CORE. Verizon
attached a copy of the agreement to its memorandum in support of its
motion to dismiss. Because Darcangelo relies on the agreement in her
complaint, it was proper for the district court to consider it in ruling on
the motion to dismiss. See New Beckley Min. Corp. v. Int’l Union,
UMWA, 18 F.3d 1161, 1164 (4th Cir. 1994).
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empted, but should treat it as a federal claim under § 502. What was
a state claim for breach of contract becomes a federal claim for the
enforcement of contractual rights under § 502(a)(1)(B). Of course,
§ 502 limits a plaintiff to equitable relief, so Darcangelo is not enti-
tled to compensatory and punitive damages on the contract claim. 29
U.S.C. § 1132(a)(1)-(3). However, Darcangelo also seeks injunctive
relief, and to that extent her § 502 claim must be considered on the
merits. The only plan provision that might provide a basis for Darcan-
gelo’s § 502 claim is the plan’s fiduciary duty provision, so the § 502
claim must stand or fall as a breach of fiduciary duty claim. As
explained at length in part II, we read Darcangelo’s complaint as
alleging conduct that is non-fiduciary in nature and unrelated to
CORE’s duties under the plan. Because the alleged wrongdoing is not
based on CORE’s conduct as a fiduciary, Darcangelo’s § 502 breach
of fiduciary duty claim fails to state a claim upon which relief can be
granted. We therefore affirm the dismissal of Darcangelo’s breach of
contract claim, albeit on different reasoning than that used by the dis-
trict court.
IV.
To sum up, Darcangelo’s complaint alleges non-fiduciary wrongful
conduct on the part of CORE and Verizon that is unrelated to their
duties under the ERISA plan. Thus, her four state claims for invasion
of privacy, negligence, unfair and deceptive trade practices, and medi-
cal privacy violations are not preempted. We emphasize that this rul-
ing is based on what was presented to us on appeal, namely,
Darcangelo’s complaint. We do not rule out the possibility that fur-
ther factual development, perhaps in summary judgment proceedings,
might establish that the four state law claims are preempted. Darcan-
gelo’s breach of contract claim is, of course, preempted and is trans-
formed into a federal claim under ERISA § 502 for enforcement of
the plan’s fiduciary requirements. However, because the conduct
alleged is not fiduciary conduct, Darcangelo fails to state a claim
upon which relief can be granted. Accordingly, we affirm the district
court’s order dismissing Darcangelo’s breach of contract claim,
reverse the order dismissing Darcangelo’s four remaining state law
claims, and remand for further proceedings consistent with this opin-
ion.
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We offer a final comment because remand returns this case to the
district court in a somewhat unsettled jurisdictional posture. Again,
we have affirmed the dismissal of Darcangelo’s one federal claim,
and only state law claims remain. Ordinarily, when "the federal
claims are dismissed before trial, even though not insubstantial in a
jurisdictional sense, the state claims should be dismissed [without
prejudice] as well." United Mine Workers of Am. v. Gibbs, 383 U.S.
715, 726 (1966). However, when an action has been removed from
state court and the district court subsequently loses its basis for origi-
nal jurisdiction, in most instances the action must be remanded to the
state court. See 28 U.S.C. § 1447(c); Roach v. W. Va. Regional Jail
and Corr. Facility Auth., 74 F.3d 46 (4th Cir. 1996). We decline to
order a remand to the state court in this case because questions remain
about the district court’s jurisdiction. As noted above, see supra note
2, the parties dispute whether, in light of Darcangelo’s attempt to
amend her complaint to add non-diverse parties, the district court has
diversity jurisdiction regardless of whether there is a federal question.
Accordingly, we remand to the district court without the additional
instruction to remand to the state court. After the dust settles, if Dar-
cangelo’s four current state law claims are all that remain and there
is no other basis for original jurisdiction, the district court should con-
sider the propriety of continuing to exercise its supplemental jurisdic-
tion. See Gibbs, 383 U.S. 715; Carnegie-Mellon Univ. v. Cohill, 484
U.S. 343 (1988); 28 U.S.C. § 1367(c).
AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED
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