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Malpractice Action Preempted by ERISA?

Taylor v. UAW-GM Legal Services Plan, et al., United States District Court, N.D. Ohio, August 13, 2010.

Facts: Plaintiff, a participant in the UAW-GM Legal Services Plan, filed the instant action for legal malpractice, breach of contract, and quantum meruit against the Plan after requesting and, allegedly, receiving negligent legal services from a Plan attorney.

In bringing the three causes of action, Plaintiff alleged that she was improperly denied benefits, i.e. competent legal services,  under the Plan.  The lower court dismissed her cause of action, in part, because the her state law claims were preempted by the federal statute governing the Plan, the Employee Retirement and Income Security Act ("ERISA").

Issue:  Is a claim for legal malpractice preempted where it arises from an attorney’s negligence to provide services that are governed by a federal statute? 

Ruling:  Yes, if the Plaintiff’s allegations rely upon the attorney’s failure to provide services governed by the federal statute.

Despite their different captions, all three claims allege that Defendants denied Plaintiff the legal services she was entitled to under the Plan…It is not the label placed on a state law claim that determines whether it is preempted, but whether in essence such a claim is for recovery of an ERISA plan benefit…This is not to say that all common law legal malpractice or quantum meruit claims against plan attorneys would be preempted by ERISA.  But the thrust of Plaintiff’s allegations in this case is that she was improperly denied benefits under the Plan.

Lesson:  Plaintiffs must be careful in how they frame their claim of legal malpractice.  Alleging denial of benefit under a particular plan governed by ERISA may void the state law negligence claim, whereas an allegation of breach of the standard of care applicable to attorneys, independent of plan benefits, may preserve the malpractice claim.

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Posted in: Federal, Ohio