Brad Edwards v. Lockheed Martin Corporation

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BRAD EDWARDS,
Plaintiff - Appellant,
v.
LOCKHEED MARTIN CORPORATION,
Defendant - Appellee.
No. 13-35591
D.C. No. 2:12-cv-05057-TOR
MEMORANDUM*
Appeal from the United States District Court
for the Eastern District of Washington
Thomas O. Rice, District Judge, Presiding
Argued and Submitted May 8, 2015
Seattle, Washington
Before: WALLACE, KLEINFELD, and GOULD, Circuit Judges.
Brad Edwards appeals from the district court’s (1) dismissal of his
Washington breach of contract claim as conflict-preempted under the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. § 1144(a), and (2) denial of
Edwards’ motion to amend his complaint to add a claim under the Maryland Wage
FILED
MAY 28 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.

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Payment and Collection Act (WPCA). We have jurisdiction under 28 U.S.C. §
1291, and we affirm.
Edwards argues that Lockheed Martin Corporation’s Voluntary Executive
Separation Program (VESP) is not an employee benefit plan under ERISA, because
ERISA is “not designed” to cover corporate programs that require a release of
claims in exchange for payment, and because VESP eligibility determinations
involve no discretion, i.e.—“Lockheed’s plan simply offer[s] a lump sum incentive
in exchange for a release of claims.” We reject these contentions.
We disagree that the release takes this out of ERISA, because ERISA plans
may require an employee to execute a release of claims to qualify for and
ultimately receive plan benefits.1 Lockheed Corp. v. Spink, 517 U.S. 882, 894
(1996); Sluimer v. Verity, Inc., 606 F.3d 584, 594 (9th Cir. 2010). The release of
claims mentions the VESP no fewer than two dozen times, and we reject Edwards’
argument that the release does not relate to the VESP.
We also disagree that the administration of the VESP did not involve
exercise of discretion. Under the plan Lockheed exercises significant discretion to
determine an employee’s eligibility for the program. The United States Supreme
1 We do not decide whether Edwards has any other claims that he could
assert, nor need we consider whether the release is inoperative or voidable because
Edwards did not receive a severance benefit under the VESP.
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Court has established that whether a severance benefit program qualifies as an
employee benefit plan turns on whether the provision of the severance benefit
“requires an ongoing administrative program to meet the employer’s obligation.”
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987). We have interpreted
that requirement to include “ongoing, particularized, administrative, discretionary
analysis” for a severance benefit program to qualify as an employee benefit
program under ERISA. Delaye v. Agripac, Inc., 39 F.3d 235, 238 (9th Cir. 1994).
Here, we are persuaded that the VESP involves an “ongoing administrative
program” within the meaning of Fort Halifax, and an “ongoing, particularized,
administrative, discretionary analysis” within the meaning of Delaye because
ample discretionary decisions are made on eligibility, disqualification, adjustments
in awards, interpretation of VESP terms, and a claims procedure that exceeds what
we have held sufficient for a termination benefit or severance program to qualify as
an ERISA plan. See Bogue v. Ampex Corp., 976 F.2d 1319 (9th Cir. 1992).
Further, the VESP requires additional work for plan administrators if former
employees who gain a separation benefit under the VESP return to Lockheed
within a year. VESP § 7(b). We hold that the VESP is an employee benefit plan
under ERISA.
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State law claims that “relate to” the VESP are conflict-preempted by ERISA.
29 U.S.C. § 1144(a). A state law claim relates to an ERISA plan “if it has a
‘connection with’ or a ‘reference to’” it, such that “the existence of an ERISA plan
is a critical factor in establishing liability under a state cause of action.” Wise v.
Verizon Communications, Inc., 600 F.3d 1180, 1190 (9th Cir. 2010) (internal
quotation marks omitted). A state claim “has a connection with” an ERISA plan if
it binds, regulates, or dictates the administration of the plan. Golden Gate Rest.
Ass’n v. City of San Francisco, 546 F.3d 639, 655–56. A state claim “references”
an ERISA plan if it “acts immediately and exclusively upon ERISA plans” or “the
existence of ERISA plans is essential to the [claim’s] operation.” Id. at 657.
Edwards’ Washington breach of contract claim meets this standard.
The release, which forms the basis for the asserted breach of contract claim,
is an express requirement for receiving benefits under the VESP. Without
participation in the VESP, Edwards would have had no release to sign in the first
place, and therefore no contract claim to assert. The existence of the VESP is a
“critical factor” that triggers ERISA conflict-preemption here. Wise, 600 F.3d at
1190. Further, Edwards’ breach of contract claim both “has a connection with”
and “references” the VESP, because it would “act . . . upon” the VESP and dictate
its administration by requiring payment on the claim from benefits created under
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the VESP’s terms. See Golden Gate, 546 F.3d at 655–57. We hold that Edwards’
Washington breach of contract claim is conflict-preempted by ERISA.
Finally, Edwards argues that the district court abused its discretion by
denying as futile Edwards’ motion for leave to amend his complaint to add a claim
under the Maryland WPCA. We disagree. We need not decide whether Edwards
has standing to bring the Maryland wage claim he sought to add to his complaint,
or whether any severance benefits Edwards might have received under the VESP
were “wages” or “incentives” under the Maryland wage law. Even if Edwards
could bring a claim against Lockheed under the Maryland WPCA, such a state law
claim would be conflict-preempted by ERISA for the same reasons Edwards’
Washington breach of contract claim is conflict-preempted. Amending one’s
complaint to add a claim that would be conflict-preempted anyway is “futile,” and
the district court did not abuse its discretion by denying Edwards’ motion to add
such a claim. See Forsyth v. Humana, Inc., 114 F.3d 1467, 1482 (9th Cir. 1997)
overruled on other grounds by Lacey v. Maricopa Cnty., 693 F.3d 896 (9th Cir.
2012).
AFFIRMED.
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