Milwaukee Carpenter's Dist. Coun. v. Philip Morris

• Decision Date: 13 September 1999
• Docket Number: No. 98-C-394.,No. 98-C-323.,98-C-323.,98-C-394.
• Citation: 70 F.Supp.2d 888
• Parties: MILWAUKEE CARPENTER'S DISTRICT COUNCIL HEALTH FUND, Welfare Benefit Plan and Its Trustees; Milwaukee Driver's Health & Welfare Trust Fund, Welfare Benefit Plan and Its Trustees; Operating Engineer's Local 139 Health & Benefit Fund, Welfare Benefit Plan and Its Trustees; Wisconsin Health Fund, Welfare Benefit Plan and Its Trustees; individually and on behalf of others similarly situated, Plaintiffs, v. PHILIP MORRIS, INCORPORATED; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Corporation; B.A.T. Industries, P.L.C.; British American Tobacco Company, Ltd.; Lorillard Tobacco Company; the American Tobacco Company; Liggett & Myers, Inc.; United States Tobacco Co.; the Tobacco Institute, Inc.; the Council for Tobacco Research U.S.A., Inc.; Smokeless Tobacco Council, Inc.; Hill and Knowlton, Inc.; National Tobacco Co., Inc.; Gerald F. Krause Enterprises, Ltd. d/b/a Friedman Tobacco and Candy Co.; and Unknown Corporations, A-Z, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

70 F.Supp.2d 888

MILWAUKEE CARPENTER'S DISTRICT COUNCIL HEALTH FUND, Welfare Benefit Plan and Its Trustees; Milwaukee Driver's Health & Welfare Trust Fund, Welfare Benefit Plan and Its Trustees; Operating Engineer's

Local 139 Health & Benefit Fund, Welfare Benefit Plan and Its Trustees; Wisconsin Health Fund, Welfare Benefit Plan and Its Trustees; individually and on behalf of others similarly situated, Plaintiffs, v. PHILIP MORRIS, INCORPORATED; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Corporation; B.A.T. Industries, P.L.C.; British American Tobacco Company, Ltd.; Lorillard Tobacco Company; the American Tobacco Company; Liggett & Myers, Inc.; United States Tobacco Co.; the Tobacco Institute, Inc.; the Council for Tobacco Research U.S.A., Inc.; Smokeless Tobacco Council, Inc.; Hill and Knowlton, Inc.; National Tobacco Co., Inc.; Gerald F. Krause Enterprises, Ltd. d/b/a Friedman Tobacco and Candy Co.; and Unknown Corporations, A-Z, Defendants.

No. 98-C-323.

No. 98-C-394.

United States District Court, E.D. Wisconsin.

September 13, 1999.

COPYRIGHT MATERIAL OMITTED

Robert P. Goldstein, Ted M. Warshafsky, Frank T. Crivello, II, Warshafsky Rotter Tarnoff, Reinhardt & Bloch, Milwaukee, WI, for Milwaukee Carpenters District Council, Health Fund, Milwaukee Drivers, Health and Welfare Trust Fund, Local 139 International Union of Operating Engineers, Health Benefit Fund, Wisconsin Health Fund, plaintiffs.

Janice L. Tucker, Quarles & Brady, Milwaukee, WI, Michael L. Zaleski, Quarles & Brady, Madison, WI, Dan K. Webb, Thomas J. Frederick, David B. Love, Winston & Strawn, Chicago, IL, for Philip Morris, Inc., Defendant.

James R. Clark, Foley & Lardner, Milwaukee, WI, Thomas F. Gardner, Thomas P. McNulty, Jones Day Reavis & Pogue, for R.J. Reynolds Tobacco Co., Defendant.

Andrew R. McGaan, Michelle H. Browdy, Karen M. Fine, Kirkland & Ellis, Chicago, IL, Kenneth N. Bass, Kirkland & Ellis, Washington, DC, for Brown & Williamson Tobacco Co., Defendant.

Ralph A. Weber, Reinhart Boerner Van Deuren, Norris & Rieselbach, Milwaukee, WI, Mary E. McGarry, Adam I. Stein, Randall R. Rainer, Simpson Thacher & Bartlett, New York, NY, for BAT Industries, PLC, Defendant.

Jeffrey S. Nelson, Bruce R. Tepikian, Shook Hardy & Bacon, Kansas City, MO, Bruce A. Schultz, Coyne Niess Schultz Becker & Bauer, Madison, WI, for Lorillard Tobacco, Co, Defendant.

Reuben A. Mjaanes, Robert V. Atmore, Lindquist & Vennum, Minneapolis, MN, Michael M. Fay, Aaron H. Marks, Marie V. Santacroce, James J. Stricker, Kasowitz Benson Torres & Friedman, New York, NY, for Liggett & Myers Inc., Defendant.

Brian E. Butler, Barbara A. Neider, John A. Hansen, Stafford Rosenbaum Rieser & Hansen, for U.S. Tobacco, Co., Defendant.

John Koeppl, DeWitt Ross & Stevens, Madison, WI, for Tobacco Institute, Inc., Defendant.

John H. Schmid, Jr., Michael J. Modl, Axley Brynelson, Madison, WI, Bruce G. Hart, Steve Klugman, Debevoise & Plimpton, New York, NY, for Council for Tobacco Research, U.S.A., Inc., Defendant.

Bruce M. Ginsberg, Davis & Gilbert, New York, NY, for Hill and Knowlton, Inc., Defendant.

David G. Peterson, Peterson Johnson & Murray, Milwaukee, WI, for National Tobacco Co., Inc., Gerald F. Krause Enterprises, Ltd., Defendants.

DECISION AND ORDER

ADELMAN, District Judge.

Plaintiffs, four named health and welfare trusts or plans, filed this lawsuit on March 8, 1998, on behalf of themselves and a proposed class against numerous tobacco manufacturers, tobacco trade organizations, public relations firms, and tobacco distributors. The complaint contains eleven claims, none of which appears, on its face, to be based upon federal law. Plaintiffs and the defendant tobacco distributors are citizens of Wisconsin. All other defendants are citizens of other states.

Notwithstanding the apparent absence of a federal question and the apparent lack of diversity, defendants removed the case from Milwaukee County Circuit Court to this district, where it was assigned to Magistrate Judge William E. Callahan, Jr. Defendants predicated removal both on 28 U.S.C. § 1331, pointing to the doctrine of complete preemption by § 502(a) of the Employee Retirement Income Security Act, 29 U.S.C. § 1132(a), and on 28 U.S.C. § 1332, asserting the theory of fraudulent joinder of the nondiverse distributor defendants.

Because what was supposed to be a 112 page complaint as filed failed to contain pages 93 through 95, plaintiffs meanwhile, on March 30, 1998, had refiled the complaint — identical except to the extent that it contained all 112 pages — as a second lawsuit in Milwaukee County Circuit Court. That lawsuit was removed by defendants, given case number 98-C-394, and assigned to Magistrate Judge Callahan as well.

Plaintiffs moved to remand both cases. In case number 98-C-323 they also moved for a voluntary dismissal, seeking to proceed only on the second-filed lawsuit. On September 17, 1998, Magistrate Judge Callahan granted both motions to remand and recommended that I deny the motion to dismiss without prejudice to refiling the motion in state court after remand. Defendants appealed¹ the remand orders,² and the appeals were assigned to me.

I. ANALYSIS

A. Standard of Review

A magistrate judge has authority to decide motions to remand, 28 U.S.C. § 636(b)(1)(A), although a party may appeal, Fed.R.Civ.P. 72(a); Local Rule § 13.02(b) (E.D.Wis.). I may set aside the magistrate judge's determination, or any portion of it, if defendants show that the order is clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Fed. R.Civ.P. 72(a); Local Rule § 13.02(b) (E.D.Wis.). The "clearly erroneous" review standard applies to factual findings, 12 Charles A. Wright, Arthur R. Miller, Richard L. Marcus, Federal Practice and Procedure § 3069 (2d ed.1997), and means that such findings cannot be overturned unless I have a definite and firm conviction that a mistake has been committed. Regarding legal issues, however, the language "contrary to law" invites more lenient, plenary review. Id.

This case involves review of legal matters — the types of claims made in the complaint — and thus I review Magistrate Judge Callahan's decision to see whether it was contrary to law.

B. Motion to Remand

As noted by Magistrate Judge Callahan, on a motion to remand the party invoking removal authority bears the burden of establishing this court's jurisdiction over the case, the removal statute is strictly construed against removal, and all doubt is resolved in favor of remand. (See R. 38 at 5 (citing cases).) The principle of construction against removal extends to ambiguous pleadings as well. Eastern States Health and Welfare Fund v. Philip Morris, Inc., 11 F.Supp.2d 384, 393 (S.D.N.Y. 1998).

Magistrate Judge Callahan thoroughly set forth the law regarding complete preemption under ERISA, in particular the three-part test of Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482 (7th Cir.1996), and Rice v. Panchal, 65 F.3d 637 (7th Cir.1995), for determining whether a claim is within the complete preemptive scope of § 1132(a) and thus invokes federal question jurisdiction. Defendants do not object to the magistrate judge's recitation of law, but rather his opinion that plaintiffs' complaint does not meet all requirements for complete preemption. I do not need to reinvent the wheel; I will repeat only what law is essential for addressing defendants' appeals.

The elements of the Jass test are as follows: (1) whether the plaintiff is eligible to bring a claim under § 1132(a); (2) whether the plaintiff's cause of action falls within the scope of an ERISA provision that the plaintiff can enforce via § 1132(a); and (3) whether the plaintiff's state law claim cannot be resolved without an interpretation of the contract governed by federal law. Jass, 88 F.3d at 1487.

Section 1132(a) provides for civil enforcement of ERISA by participants, beneficiaries, and fiduciaries of employee benefit plans. As the parties agree that the plaintiffs are neither participants nor beneficiaries of any plans, and the lawsuit does not involve any alleged breach of fiduciary duties, the pertinent part of § 1132(a) for this case can be only subsection (3):

(a) Persons empowered to bring a civil action

A civil action may be brought —

...

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan ....

29 U.S.C. § 1132(a).

Federal courts possess exclusive jurisdiction over suits brought pursuant to this section. 29 U.S.C. § 1132(e); Administrative Comm., as Adm'r of the Assocs.' Health and Welfare Plan v. Gauf, 188 F.3d 767, 770 (7th Cir.1999). And the preemptive force of ERISA is so powerful that it converts a state law claim into an action arising under federal law, no matter what the plaintiffs label the claim and no matter whether they want relief under ERISA. Jass, 88 F.3d at 1490.

Magistrate Judge Callahan found that the plaintiffs do meet the first element of the Jass test, as they are fiduciaries of ERISA plans empowered by § 1132(a)(3) to bring a lawsuit. In their brief opposing defendants' appeal plaintiffs dispute this finding, contending that they are merely the funds, and funds themselves are not fiduciaries. Plaintiffs' argument is unpersuasive, especially because their own complaint lists each "fund, welfare benefit plan and its trustees" as a plaintiff in the caption, and plaintiffs at one point in the complaint assert that they, even as trust funds or plans, have "fiduciary duties toward beneficiaries to provide payments for health care costs and to preserve the trust property and funds." (Compl. ¶ 238; see also Compl. ¶ 241 ("All plaintiffs have a fiduciary duty to provide such [addiction] treatments.").) An ERISA fiduciary is anyone...