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Jeffrey Hansen, An Individual v. Harper Excavating

April 13, 2011


Appeal from the United States District Court for the District of Utah (D.C. No. 2:07-CV-00679-BSJ)

The opinion of the court was delivered by: Ebel, Circuit Judge.


United States Court of Appeals Tenth Circuit

Elisabeth A. Shumaker Clerk of Court

Before TYMKOVICH, EBEL, and GORSUCH, Circuit Judges.

This case requires us to address the preemptive scope of the Employee Retirement Income Security Act ("ERISA"), as well as to clarify the relationship between judicial estoppel and subject-matter jurisdiction. Jeffrey Hansen worked for Harper Excavating for six months beginning in 2003. During this time, he attempted to enroll in Harper's ERISA-regulated health insurance plan, but, unbeknownst to him, Harper never effectively enrolled him in the plan, although it did deduct plan "payments" from his paycheck. Shortly after he left the company, Hansen fell ill, and incurred thousands of dollars in medical expenses when he discovered that he did not actually have insurance through Harper.

Hansen sued in federal court under ERISA and won a substantial damages award. During discovery related to that suit, Hansen learned of other alleged behavior on the part of Harper that led him to file a lawsuit based entirely on state law against his former employer in state court in Utah. Harper removed that case to federal court. The district court denied remand, then dismissed the case. Exercising jurisdiction under 28 U.S.C. § 1291, we REVERSE and REMAND with instructions to remand the case to state court.


Jeffrey Hansen was hired by Harper Excavating in November 2003. When he was hired, he was told by Harper that employees were eligible to enroll in its health insurance plan after 90 days on the job. He completed the enrollment forms, which he assumed would be submitted once he had worked the requisite 90 days. In February 2004, Hansen learned that premiums were not being deducted from his pay. Harper's benefits coordinator, Stacy Henderson, told Hansen that his original paperwork had been lost, and had him fill out a new set of enrollment forms, which she sent to Regence BlueCross BlueShield of Utah ("BCBS"), Harper's insurance provider. Henderson also provided Hansen with the policy and group numbers of Harper's insurance policy in the event Hansen needed to use the insurance before his own enrollment card arrived. Harper began regularly deducting premium payments from Hansen's check, for coverage retroactive to February 1, 2004 (i.e. 90 days after he began working for the company). On April 28, 2004, Hansen left his employment with Harper.

In May 2004, Hansen went to the hospital with breathing problems. When he presented the group and policy numbers given to him by Henderson, he was informed that he had no coverage under Harper's plan. As was later revealed in discovery, Harper's contract with BCBS required employees to apply for coverage between 60 and 90 days after starting employment, rather than after 90 days, as Hansen had been told. His initial paperwork had never been submitted, and when Henderson submitted his second round of paperwork in March 2004, it was rejected by BCBS as untimely (which is to say, after the 60-90 day window had closed). Harper was notified of this rejection, and yet never informed Hansen that he was not covered and, moreover, continued to deduct "premium payments" from his paycheck for the remainder of his tenure with the company. In June 2004, Harper sent Hansen a check for $279.91 in refunded payments, as well as a copy of the notification of rejection for Hansen it had received from BCBS in March 2004.

Because he was unable to obtain medical care, Hansen's condition worsened; he currently suffers from spinal cord damage and is blind in one eye due to glaucoma. On November 15, 2005, Hansen filed suit against Harper in the United States District Court for the District of Utah, in case number 05-cv-00940. This federal lawsuit sought damages based on three alleged violations of ERISA committed by Harper. On May 8, 2007, the district court granted summary judgment in Hansen's favor on liability. Hansen v. Harper Excavating, Inc., No. 2:05-cv-00940-DAK, Mem. Decision and Order at 9, Doc. 99 (D. Utah. May 8, 2007) [Hansen I].*fn2 In March 2008, after a hearing on damages, the district court awarded Hansen a total of $57,182.33 to recompense his medical expenses, and $102,056.88 in attorney's fees and costs. Id., Doc. 127 at 6-7. Harper did not appeal this award.

During discovery in the federal lawsuit, Hansen learned of the actions of Henderson and Harper noted above. On June 6, 2007 (which is to say, after winning summary judgment in Hansen I but before the award of damages), Hansen filed the instant lawsuit, Hansen II, in the Third Judicial District Court of Salt Lake County, Utah. This suit alleged five causes of action, all brought under Utah state law: (1) fraudulent nondisclosure; (2) negligent misrepresentation; (3) conversion; (4) breach of contract -- good faith and fair dealing; and (5) special damages. On August 12, 2007, Harper filed a Notice of Removal of the state-court case with the federal district court, arguing that Hansen's claims were completely preempted by ERISA, and thus federal jurisdiction over the claims existed; shortly thereafter, Harper also filed a motion to dismiss Hansen's claims. Hansen filed an objection to removal (which the district court treated as a motion to remand), a memorandum in opposition to dismissal, and sought leave to amend his complaint to add Henderson as a defendant, as well as to add claims for negligent supervision and vicarious liability against Harper. On April 28, 2008, the district court Cont. issued an order denying Hansen's motion to remand, dismissing the case on the basis of res judicata, and denying Hansen's motion to amend his complaint as moot.

We conclude that Hansen's claims are not completely preempted by ERISA and the district court erred in denying Hansen's Request to Remand. Accordingly, we also vacate the district court order dismissing Hansen's complaint on the basis of res judicata.


The district court denied Hansen's request to remand the case to state court, holding that his claims are completely preempted by ERISA. We review this decision de novo. Felix v. Lucent Techs., Inc., 387 F.3d 1146, 1153 (10th Cir. 2004) ("We review de novo the question ...

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