Federal Court Finds ERISA Preemption Bars Retiree’s State-Law Claims Over Lost Benefits

In Quinn v. Southern California Edison Company, at al., No. 2:25-CV-02624-ODW (KSX), 2025 WL 2432658 (C.D. Cal. Aug. 22, 2025), the U.S. District Court for the Central District of California issued a ruling reinforcing the broad scope of ERISA preemption in disputes involving employee benefit plans. The court held that a retiree’s state-law claims challenging the termination of a post-retirement utility reimbursement benefit were completely preempted by the Employee Retirement Income Security Act of 1974 (ERISA) and further barred under the federal enclave doctrine.

This decision underscores how ERISA can displace state-law remedies entirely and serves as a reminder that employees and retirees often must bring benefit-related claims under federal law.

Background of the Case

Plaintiff D. Quinn, a retired Nuclear Technical Specialist who worked at Southern California Edison’s San Onofre Nuclear Generating Station (SONGS) from 1979 until 2009, participated in SCE’s Electric Service Reimbursement Benefit (ESR Benefit). This program reimbursed employees and retirees living outside the company’s service area for a portion of their electric bills.

In 2022, SCE notified Quinn that the ESR Benefit would be discontinued effective January 1, 2023. Quinn sued in California state court, asserting claims for age discrimination under FEHA, unpaid wages, breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith, unfair business practices, and other state-law causes of action.

SCE removed the case to federal court, arguing that Quinn’s claims were preempted by ERISA and barred by the federal enclave doctrine because SONGS is located on a federal enclave. (A federal enclave is land within a state that is under the exclusive jurisdiction of the federal government, often because it was acquired by the United States for military installations, federal facilities, or other federal purposes. On federal enclaves, state laws enacted after the land was ceded generally do not apply unless Congress adopts them, meaning many state employment and labor protections are preempted.)

Court’s Ruling: ERISA Preemption Applies

The court applied the two-prong test from Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), which determines whether a state-law claim is completely preempted by ERISA § 502(a):

1. Could the plaintiff have brought the claim under ERISA?
   Yes. Quinn’s breach-related claims were based entirely on rights under his written retirement benefits plan—an ERISA-governed plan.
2. Is there any independent legal duty outside the plan?
   No. The court found no independent legal duty apart from the plan’s terms. Quinn’s claims sought to recover “benefits due” under the retirement plan, placing them squarely within ERISA’s civil enforcement framework.

Because both prongs were satisfied, the court held that ERISA preempted Quinn’s contract and fiduciary-duty claims.

Federal Enclave Doctrine Bars Remaining State-Law Claims

The court further dismissed Quinn’s employment-based claims—including age discrimination under FEHA, unpaid wages, and PAGA penalties—because they arose from work performed at SONGS, a federal enclave. State laws enacted after SONGS became a federal enclave (such as FEHA in 1980 and PAGA in 2004) do not apply unless adopted by Congress, which they were not.

Implications for Employees and Retirees

This case highlights that when benefits are provided under an ERISA plan, state-law remedies will almost always be preempted. Retirees challenging the loss of promised benefits must typically proceed under ERISA’s civil enforcement provisions, which require strict adherence to plan terms and administrative remedies.