In Sirva Relocation, LLC v. Richie, 794 F.3d 185 (1st Cir. 2015), ERISA preemption met federal abstention, and lost. Knight was an employee of Sirva, which had a disability plan insured by Aetna. Knight received 24 months of disability benefits, which were then terminated under a mental illness limitation; he responded by filing a discrimination charge against Sirva and Aetna with the Massachusetts Commission Against Discrimination (MCAD), alleging that Sirva and Aetna paid disparate benefits depending on whether the claimant suffered from a physical or mental impairment. Sirva and Aetna moved to dismiss, arguing ERISA preemption, and, after a three-year wait, MCAD denied the motion without prejudice.

After another several years passed, MCAD certified the case for a hearing, and Sirva and Aetna sued the state, MCAD and Knight in federal court, seeking a declaration that ERISA preempted the state action. The district court enjoined the action, relying in the federal abstention doctrine.

On appeal, the First Circuit provided a lengthy history of the abstention doctrine, enunciated in Younger v. Harris, 401 U.S. 37 (1971), and recently clarified and narrowed in Sprint Comms., Inc. v. Jacobs, 134 S.Ct. 584 (2013). The doctrine provides that a court will abstain from a suit seeking to enjoin certain state actions if the state action allows the federal defense to be raised, and there is no irreparable harm. It applies to three types of state actions: (i) criminal prosecutions, (ii) “civil proceedings that are akin to criminal prosecutions,” and (iii) proceedings “that implicate a State’s interest in enforcing the orders and judgments of its courts.” There are various exceptions and nuances to the doctrine, discussed by the First Circuit.

The court first ruled that the MCAD proceeding was a civil proceeding akin to a criminal prosecution, because the path chosen by Knight to raise his discrimination claim results in a prosecution by MCAD in its own name, rather than a civil action by Knight.

The court next held that the MCAD proceeding implicates important state interests, and gave sufficient opportunity to raise the ERISA preemption defense, which typically exists as long as no state procedural rule bars the assertion of the defense, and there is a fair opportunity to raise it. Though MCAD initially rejected the defense without prejudice, it “has acknowledged that ERISA preemption remains an open question in the case.”

Finally, and most significantly, the court addressed whether the claim of ERISA preemption was “facially conclusive,” and found that it did not exist here. The court found that the statute plainly related to an ERISA plan; then observed that a state anti-discrimination law is preempted only to the extent it prohibits more conduct than its federal counterpart, here the ADA. The court rejected the state’s argument that an issue of first impression – which this was – could never be facially conclusive.

Turning to the question whether the state statute went farther than the ADA (and thus would be preempted) the court was not persuaded by Sirva’s argument that “the unanimous consensus of federal circuit courts on this issue” had ruled that the ADA permitted disparate benefits based on the type of disability. It found that the Supreme Court had never ruled on the question, and that “deciding this question would entail resolving a complex web of legal issues.” Moreover, “some of the circuit court decisions upon which the appellants rely were made over strong dissents.” The court noted that some of its prior decisions “have left open the possibility that an ADA claim based on differential benefits may be viable.” The court concluded: “Given this littered legal landscape, it cannot be said that there is no room for principled disagreement about the viability of differential-benefits claims under the ADA. While the answer to that question seems much clearer than the MCAD admits, it is not the slam dunk that the appellants suggest. In short, resolving the preemption question presented here calls for exactly the sort of extensive legal analysis that places the facially conclusive preemption exception out of reach.”

Finally, the court ruled that appellants had not explained how they would be irreparably harmed by allowing MCAD to resolve the question whether ERISA preempted the state law.