Dissenting:

OVERVIEW

Kevin McBride appeals the district court’s order granting summary judgment in favor of his employer PLM, International, Inc. The court granted summary judgment on the ground that McBride’s discharge in conjunction with the termination of the employee benefit plan left him without the “participant status” required to give him standing to sue under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (1994). The district court relied on several Ninth Circuit cases which have held that a claimant’s status is to be evaluated at the time of filing suit. These cases, however, do not control McBride’s claim. Policy considerations mandate that participant status and standing under ERISA’s whistle blower provision be adjudged at the time of the alleged ERISA violation. To hold otherwise allows an employer wrongfully to terminate an employee and then wrongfully to terminate an employee benefit plan, thereby depriving its former employee of standing to sue for the wrongdoing under ERISA. Such a holding undercuts the very protections ERISA was designed to afford. Thus, I respectfully dissent.

BACKGROUND

Kevin McBride was hired by PLM, International, Inc. in March of 1988 to work in its TEC department. Prior to his termination on August 9, 1994, he was promoted twice and received two bonuses in addition to several salary increases. During his employment, McBride’s performance evaluations noted that his work was excellent or outstanding. Letters accompanying the bonuses commended him for his good work and significant contributions to the company.

In early April 1994, McBride met with Robert Tidball, President and CEO of PLM, and Douglas Goodrich, McBride’s supervisor and a PLM Senior Vice President. They informed McBride that he had a bright future with the company and that he was in line for a promotion to the new position of Director of Operations for the TEC department. Also in April of 1994, McBride submitted a written request for payment of commissions earned during the previous three years. He met with his supervisor, Goodrich, to discuss the commissions. Goodrich informed McBride that he did not think PLM had to pay the commissions, but if the legal department believed it must, PLM would pay. The discussion became quite animated, culminating in McBride’s threat to sue PLM if the commissions were not paid. After the meeting, Goodrich wrote a confidential memorandum to the PLM personnel department describing McBride’s conduct and instructing that the letter be placed in McBride’s file. After a few days, McBride apologized to Goodrich for his behavior. Goodrich informed McBride that if he was insubordinate again, he would be terminated. PLM paid *979 the commissions to McBride one month after his written request.

After this incident, Goodrich requested that McBride prepare two reports for him. Goodrich testified that McBride never turned in the reports, only the raw data. McBride testified that he had turned in the requested reports.

McBride was a participant in and beneficiary of both the PLM International Employee Profit Sharing and Tax Advantaged Savings Plan (401-K Plan) and the PLM International Employee Stock Ownership Plan (ESOP) (collectively the Plans). McBride was also an active member of the Employee ESOP Committee. In the spring of 1994, PLM announced its intention to terminate the ESOP and proposed to convert each share of PLM preferred stock held by the ESOP to one share of PLM common stock. McBride ardently opposed PLM’s proposal and called foi’ a meeting of employees to discuss the ESOP termination. He alleged that the preferred stock had a redemption price or value of $13.00 per share and the common stock had a market price of $3.06 per share. He argued that the conversion of the preferred shares would result in the loss of the guaranteed dividend payable on the preferred shares and the reduction in value equal to the difference between the redemption price of the preferred stock and the market price of the common stock. McBride also expressed his opposition personally to both Tidball and Goodrich.

PLM filed a request with the IRS for a determination of whether the termination of the ESOP would affect the ESOP’s tax status or qualification. In July 1994, McBride and other members of the employee ESOP committee sent a letter to the U.S. Department of Labor asking it to submit comments to the IRS on the proposed ESOP termination. In the letter, McBride and other committee members provided information on the ESOP and the effect its termination would have on PLM employees.

PLM management was upset by the committee’s letter and offered to pay for an outside attorney to review the propriety of the ESOP termination if the committee would withdraw the letter to the Labor Department. All committee members, except McBride, agreed to this proposal. They withdrew the letter. On August 9,1994, less than three weeks after the letter incident, PLM discharged McBride. The proffered reasons were McBride’s insubordinate conduct toward his supervisors and his failure to produce the requested reports.

Later in August, PLM terminated the ESOP. All participants, including McBride, received a lump sum distribution of their benefits under the Plan. They received the value of the common rather than the preferred stock. Also, after McBride’s termination, Goodrich held an employee meeting in which he allegedly stated that McBride was not discharged because of his opposition to the ESOP termination, but because of his work performance and poor attitude.

In his original complaint, McBride alleged that he was terminated by PLM in retaliation for his opposition to the prospective termination of the ESOP and 401-K Plan. McBride asserted four claims for relief: (1) violation of § 1140 of ERISA, the “whistle blower” section; (2) a supplemental state law claim for wrongful termination in violation of public policy; (3) a supplemental state law claim for defamation arising from PLM’s publication of statements criticizing McBride after his termination; and (4) another state law claim for breach of the covenant and good faith and fair dealing from the terms of the Certificate of Designations, governing the preferred shares of PLM stock held by the ESOP.

PLM .successfully moved, under Federal Rule of Civil Procedure 12(b)(6), for dismissal of the fourth cause of action for breach of the covenant of good faith and fair dealing on the basis that the claim was preempted by ERISA. Subsequently, McBride submitted an amended complaint which excluded the fourth cause of action. However, McBride appeals the decision of the district court finding this cause of action preempted by ERISA.

PLM then brought a motion for summary judgment alleging that McBride lacked standing to bring the ERISA claim. The district court granted PLM’s motion for summary judgment on the basis that McBride failed to qualify as a “participant” under *980 ERISA at the time of filing the lawsuit and therefore lacked standing to assert a'claim for relief in federal court. Further, the court determined that it lacked jurisdiction to rule on whether McBride’s fourth cause of action was preempted by ERISA.

DISCUSSION

Questions of federal subject matter jurisdiction are questions of law reviewed de novo. Kruso v. Int’l Tel. & Tel. Corp., 872 F.2d 1416 , 1421 (9th Cir.1989). A grant of summary judgment is reviewed de novo. Covey v. Hollydale Mobilehome Estates, 116 F.3d 830, 834 , amended by 125 F.3d 1281 (9th Cir.1997).

A. Standing to Sue Under ERISA Participant Status Under Whistle Blower Provision

ERISA grants standing to a “participant” in an employee benefit plan to bring a civil action to enforce his rights under the terms of the plan or to enforce the provisions of ERISA. 29 U.S.C. § 1132 (1994). Section 1132, the civil enforcement provision of ERISA, provides that a civil action may only be brought by a participant, beneficiary or fiduciary. The list of potential claimants in § 1132 is exclusive. Harris v. Provident Life and Accident Ins. Co., 26 F.3d 930, 933 (9th Cir.1994).

ERISA defines the term “participant” to include “any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan.” 29 U.S.C. § 1002 (7).

The Supreme Court has defined the term “participant” to mean “either employees in, or reasonably expected to be in, currently covered employment, or former employees who have ... a reasonable expectation of returning to covered employment or who have a colorable claim to vested benefits.” Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 117 , 109 S.Ct. 948 , 103 L.Ed.2d 80 (1989) (citations and quotations omitted). The 'Court also construed the “may become eligible” for benefits language of § 1002(7) to mean that “a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future.” Id. at 117-18, 109 S.Ct. 948 . The Court reasoned, a former employee who has neither a reasonable expectation of returning to covered employment nor a colorable claim to vested benefits, “simply does not fit within the phrase ‘may become eligible.’” Id. at 118 , 109 S.Ct. 948 (citing Saladino v. I.L.G.W.U. Nat’l Retirement Fund, 754 F.2d 473, 476 (2d Cir.1985)).

PLM argues that McBride lacks standing to sue under ERISA. It contends ERISA excludes from the definition of “participant” former employees who have received full distributions of them vested benefits. PLM also argues that McBride has no reasonable expectation of returning to covered employment, as the plan itself no longer exists.

The problem with PLM’s arguments, and the cause for my respectful difference with the district court and with my colleagues, is the context in which McBride’s ERISA claim arose. McBride alleged that he was terminated in retaliation for his opposition to PLM’s proposed termination of the ESOP and the 401-K Plan. The ERISA whistle blower provision makes it illegal to discharge an employee for exercising his rights under the benefit program or under ERISA. Section 1140 states:

29 U.S.C. § 1140 . “This statute is clearly meant to protect whistle blowers.” Hashimoto v. Bank of Hawaii, 999 F.2d 408, 411 (9th Cir.1993).

The district court in this case felt compelled by precedent to find that McBride lacked standing to sue under ERISA because he was not a participant at the time he filed *981 suit. The district court was rightly concerned, however, that its holding would allow employers unfairly to escape liability for violations of ERISA. The very actions taken by an employer which presumably violated ERISA might, the district court reasoned, simultaneously have the effect of.depriving potential employees of standing to sue. In its written decision, the court expressed its apprehension:

In other distinguishable contexts, this court .has asserted that standing for former employees is measured at the time of filing suit. See, e.g., Harris, 26 F.3d at 933 ; Olson v. General Dynamics Corp., 960 F.2d 1418, 1422 (9th Cir.1991). However, none of the cases dealing with this rule arose in the context of the whistle blower provision of ERISA. This court left open the relationship between §§ 1140 and 1132 of ERISA, noting that it was “a question we need not decide now.” Hashimoto, 999 F.2d at 411 . 1

Section 1140 creates a right of action for interference with protected rights that accrues upon the occurrence of the prohibited acts. Depriving a plaintiff of standing to sue under ERISA for his employer’s clear violation of the statute makes standing contingent upon the occurrence of subsequent events entirely within the control of the employer. “[I]t would seem more logical to say that but for the employer’s conduct alleged to be in violation of ERISA, the employee would be a current employee with a reasonable expectation of receiving benefits, and the employer should not be able through its own malfeasance to defeat the employee’s standing.” Christopher, 950 F.2d at 1221 (citing Amalgamated Clothing and Textile Workers v. Murdock, 861 F.2d 1406 , 1418 (9th Cir.1988)). Requiring that claimants like McBride be plan participants at the time of suit would create a race to the courthouse. Standing would depend upon which event occurred first: the plan’s termination or the claimant’s filing of a lawsuit. In this ease, McBride alleged that his discharge was caused by his criticism of PLM’s proposed ESOP termination. The irony of holding that the plan’s termination itself then deprived McBride of standing to sue is palpable. .

When an individual alleges, as here, that he was discharged in violation of ERISA’s whistle blower provisions, his employer cannot be allowed to evade § 1140 accountability simply by terminating the' plan and distributing the benefits. If an employee is a participant at the time of the alleged ERISA violation and alleges that he was discharged or discriminated against because of protected whistle blowing activities, we should hold that the employee has standing to sue under ERISA. To require that the claimant be a participant at the time of filing suit undermines the very purpose of ERISA’s whistle blower provision to provide a federal remedy for discrimination against plan participants for exercising their protected rights under ERISA. These protected rights specifically include the right to request comments from the Department of Labor on a proposed plan termination. See 29 U.S.C. §§ 1140 , 1201.

Because McBride was a “participant” in the ESOP at the time of his allegedly retaliatory discharge, he falls within the scope of protection afforded by the whistle blower provision of ERISA. Therefore, he should have standing to sue PLM for lost wages and benefits, specifically the loss in value of his proportional share of the ESOP before conversion of the preferred stock. Consistent with his original prayer for relief, McBride also has standing to seek equitable relief to enjoin further violations of ERISA. This may include reinstatement to his former po *982 sition at PLM and either reinstatement of the ESOP or reconversion of all common shares distributed back to their preferred stock value.

I would hold that under § 1140, participant status must be measured at the time of the alleged violation because the cause of action accrues at the time of discharge or discrimination. Standing under § 1140 does not depend upon whether the former employee seeks to or could obtain reinstatement to covered employment. The continued existence of a plan is not essential to the enforcement of the goals § 1140 was designed to address. See Christopher v. Mobil Oil Corp., 950 F.2d 1209, 1221 (5th Cir.1992).

This holding would be consistent with the Congressional findings and declaration of policy of ERISA: “It is hereby declared to be the policy of this chapter to protect interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, ... by providing for appropriate remedies, sanctions, and ready access to the Federal courts.” 29 U.S.C. § 1001 (b) (emphasis added). This court should be guided by Congressional policy and purpose. See Crotty v. Cook, 121 F.3d 541, 546 (9th Cir.1997). Furthermore, the legislative history of ERISA indicates that “Congress viewed [the whistle blower provision] as a crucial part of ERISA because, without it employers would be able to circumvent the provision of promised benefits.” Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143 , 111 S.Ct. 478 , 112 L.Ed.2d 474 (1990) (citations omitted).

B. ERISA Preemption of Fourth Cause of Action

Because the district court had subject matter jurisdiction to adjudicate McBride’s claims, the court could indeed have entertained the issue of ERISA preemption. See Curtis v. Nevada Bonding Corp., 53 F.3d 1023, 1027 (9th Cir.1995) (holding that a plaintiffs standing to enforce ERISA is a prerequisite to both subject matter jurisdiction and ERISA preemption).

McBride’s fourth cause of action alleged that PLM entered into a contractual relationship with owners of its preferred stock and breached the covenant of good faith and fair dealing. The contract terms were governed by the Certificate of Designations which enumerated the rights and conditions under Delaware state law attached to ownership of PLM preferred stock. The Certificate provided that preferred stock could only be held by a trustee of the ESOP or some other PLM benefit plan. Upon transfer, the preferred stock would be converted to common stock. McBride alleged that PLM terminated the ESOP and the 401-K plan to effect an automatic conversion of the preferred shares into common shares. He contends this constituted a breach of an implied covenant in the' Certificate of Designations. The district court did not originally err when it dismissed the Fourth Cause of Action. The cause of action fell within ERISA’s preemptive scope. I believe the district court did err, however, in its final order granting summary judgment to PLM when it stated that, because it did not have jurisdiction over the matter, there could be no preemption under ERISA.

ERISA preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” governed by ERISA. 29 U.S.C. § 1144 (a); Ford v. St. Joseph’s Omni Preferred Care Inc., 130 F.3d 1355 , 1358 (9th Cir.1997). “[A]lthough ERISA’s express preemption is deliberately expansive, the preemption does not extend to state claims that affect employee benefit plans in too tenuous, remote, or peripheral a manner.” Ford, 130 F.3d at 1358 (citations and quotations omitted). “A law that does not refer to ERISA may still be preempted by it if is has a ‘connection with’ ERISA plans.” California Div. of Labor Standards Enforcement v. Dillingham Constr., 519 U.S. 316 , 117 S.Ct. 832, 838 , 136 L.Ed.2d 791 (1997). To determine whether the state law has the “forbidden. connection,” the court must look to the objectives of the ERISA statute as well as to the nature of the effect of the state law on ERISA plans. Id.

To determine whether an implied covenant of good faith and fair dealing contained in the Certificate is connected to an ERISA benefit plan, district courts weigh the following factors:

Operating Eng’rs Health and Welfare Trust Fund v. JWJ Contracting Co., 135 F.3d 671, 678 (9th Cir.1998) (quoting Aloha Airlines, Inc. v. Ahue, 12 F.3d 1498, 1504 (9th Cir.1993)).

The district court held that because McBride’s Fourth Cause of Action relates to PLM’s employee benefit plan, the cause of action is preempted. If the district court applied Delaware state law, the court would be directly regulating the types of benefits PLM’s employees would receive. McBride argues the district court should have directed PLM to pay the redemption price for preferred shares of stock held by the ESOP trustee, rather than the conversion price at the common stock value. Because the court’s action would have regulated the types and amount of benefits provided by the ESOP, ERISA preempts the state claim.

In addition, regulation of an ERISA relationship, whether direct or indirect, is a sufficient basis for preemption. Gibson v. Prudential Ins. Co. of America, 915 F.2d 414, 416 (9th Cir.1990). “Even claims brought under state-law doctrines that do not explicitly refer to employee benefit plans are preempted: when the claims arise from the administration of such plan whether directly or indirectly.” Id. (citing Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1095 (9th Cir.1985)). The Certificate of Designations explicitly regulates the shares of stock under the ESOP and other PLM employee benefits plans. The Certificate was drafted in connection with the ESOP and its related documents. The purpose of the preferred shares as described in the Certificate of Designations was to fund the ESOP. Even McBride acknowledges that the Fourth Cause of Action arose from a purported breach of the covenant of good faith and fair dealing between PLM and the owners of its preferred stock, the employees who were beneficiaries of the ESOP. The Certificate of Designations affects the relationships between the ERISA plan and the employer, as well as the employer and employee. The Certificate clearly related to an ERISA plan. .Therefore, McBride’s fourth cause of action should have been preempted by ERISA.

CONCLUSION

Kevin McBride alleges that he was discharged from his employment with PLM International, Inc. in retaliation for his opposition to the proposed termination of the firm’s employee benefit plans. Shortly after McBride’s discharge, PLM indeed terminated the ESOP and 401-K plan. PLM distributed, benefits to participants in the form of a lump sum. When a claimant falls under ERISA’s whistle blower provision, the overr riding policy of ERISA mandates that a claimant’s status as a plan participant must be measured at the time of the alleged ERISA violation and not at the time of filing suit. To hold otherwise allows an employer’s wrongful conduct to immunize it from federal liability. An employer cannot be allowed wrongfully to terminate an employee benefit plan and distribute plan benefits in lump sum before the claimant files suit, and thereby deprive the claimant of standing to sue for the wrongful conduct.

The district court did not err by holding that McBride’s state law claim for breach of the covenant of good' faith and fair dealing was preempted by ERISA as the contract was clearly related to the ERISA plan.

. Although the court in Hashimoto did not decide the question of whether § 1132 limited potential plaintiffs who could file suit under § 1140, the court did conclude that the plaintiff in that case was a fiduciary and therefore had standing to sue. The status of fiduciary was determined at the time of the alleged violation of ERISA's whistle blower provision, not at the time of filing suit. Hashimoto was no longer a fiduciary when she filed suit and yet she was "empowered to bring a civil action under § 1132 to enforce § 1140, ERISA's whistle blower provision.” Hashimoto, 999 F.2d at 411 .