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PETKUS v. CHICAGO RAWHIDE MFG. CO.

April 15, 1991

ZEN J. PETKUS, Plaintiff,
v.
CHICAGO RAWHIDE MANUFACTURING COMPANY, Defendant



The opinion of the court was delivered by: ASPEN

 MARVIN E. ASPEN, UNITED STATES DISTRICT JUDGE

 The plaintiff, Zen Petkus, originally filed this action against the defendant in the Circuit Court of Cook County, Illinois ( No. 90 CH 08568) claiming that he had been improperly denied certain pension benefits promised him under two pension plans maintained by the defendant, Chicago Rawhide Manufacturing Company ("CR"). CR subsequently removed Petkus' action to this Court claiming federal jurisdiction under the Employee Retirement Income Security Act ("ERISA"), 28 U.S.C. § 1441(a), on the ground that the plans are governed by ERISA. After removal, Petkus amended his complaint to delete allegations that CR had breached its Salaried Employees Pension Plan ("Qualified Plan"), a plan which the parties agree is subject to ERISA. Apparently, after further consideration, Petkus had determined that he possessed no conceivable basis for recovery under the Qualified Plan. CR does not dispute the bona fides of that determination.

 As now pleaded, Petkus alleges that CR has breached only the Supplemental Executive Retirement Plan ("SERP"). CR has moved for a judgment on the pleadings under Federal Rule of Civil Procedure 12(c) on the ground that Petkus possesses no ground for recovery according to the plain terms of the SERP. For the following reasons, however, we do not reach the merits of CR's motion and instead remand the case to state court.

 Petkus, believing that the SERP is an unfunded "excess benefit plan" that is not governed by ERISA, *fn1" informed us at a status hearing that he was concerned that we no longer had subject matter jurisdiction over the amended complaint since it only involved a state law contract dispute between nondiverse parties. Petkus has indicated that he raised the issue of jurisdiction solely for the convenience of the parties and the Court (Petkus has not filed a motion to remand), in order to avoid a surprise remand by this Court or the Seventh Circuit after considerable time and money had been spent litigating in this forum; his only concern is that the case be decided by a court with proper jurisdiction over it. Petkus' concern is not without foundation, since a party "cannot create subject-matter jurisdiction -- either by waiver, estoppel, or the filing of a lawsuit -- over a non-Article III case." Finley v. United States, 490 U.S. 545, 109 S. Ct. 2003, 2012, 104 L. Ed. 2d 593 (1989) (Stevens, J., dissenting).

 CR, however, characterizing Petkus' action and argument as an attempt to defeat removal, maintains that a jurisdictional problem does not exist for two reasons. First, CR contends that Petkus' amendment did not remove the federal question from the complaint. Specifically, CR maintains that the SERP is not an excess benefit plan exempt from ERISA and therefore is subject to ERISA's jurisdictional provisions. Second, CR argues that a plaintiff cannot defeat removal of a case from state to federal court by amending the complaint to delete the federal question presented in the original pleading, and therefore jurisdiction is proper even in the absence of a federal question.

 A.

 CR's first contention rests on ERISA's definition of what constitutes an exempt excess benefit plan:

 
The term "excess benefit plan" means a plan maintained by an employer solely for the purpose of providing benefits for certain employees in excess of the limitations on benefits imposed by section 415 of Title 26 on plans to which the section applies, without regard to whether the plan is funded. . . .

 29 U.S.C. § 1002(36) (1988). Petkus, citing to Section 2.2(a) of the SERP, maintains that the SERP meets that definition by expressly providing that the sole purpose of the plan is to offer participants a retirement benefit in excess of the benefit provided under the Qualified Plan, as limited by Section 415 of the Internal Revenue Code ("Code"). CR takes issue with that assertion by pointing out that the SERP will supplement the retirement benefits so that the participant will receive

 
The Actuarial Equivalent of the benefit that would be paid to the Participant under the Qualified Plan if the limitations of [Internal Revenue] Code Sections 415 and 401(a)(17) did not apply to such benefit.

 See 26 U.S.C. §§ 415 and 401(a)(17) (1988). CR's point is appealing in its simplicity: Because the SERP provides for benefits in excess of both Code Section 401(a)(17) and Code Section 415, then it cannot be said to solely provide for benefits in excess of Code Section 415 limitations. CR therefore argues that the plan does not satisfy ERISA's definition of an excess benefit plan.

 The application of the statute to the SERP, however, requires a closer analysis than CR's argument would suggest. As is often the case in statutory interpretation, words are not always what they seem, and in this case the significance of the word "solely" and what is meant by "in excess" of Code Section 415 limitations, must be considered in relevant context. To this end, we observe that the remaining portion of 29 U.S.C. Section 1002(36) further provides

 
To the extent that a separable part of a plan (as determined by the Secretary of Labor) maintained by an employer is maintained for such a purpose, that part shall be treated as a ...

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