The issue of whether Northwestern qualifies as a fiduciary
under ERISA turns on whether the reimbursement of money
allegedly owed in Count I can properly be characterized as
funds belonging to the Plan. In other words, does the retention
of monies allegedly owed to the Plan fund constitute Plan
assets that touch an essential fiduciary duty owed to the Plan,
participants, or beneficiaries. Northwestern otherwise has no
discretionary authority or control with regard to the Plan. The
pleadings reveal that Northwestern's authority outside of the
money allegedly owed was limited to the auditing of the Plan
Administrator's and the Brokaw and Mennonite Hospitals' records
as the records related to the Plan. This nexus between
Northwestern and the Plan is too tenuous to confer fiduciary
status. Northwestern must have had control or authority over
A regulation promulgated under the Department of Labor's
delegated statutory authority under ERISA sections 1031, 1133
and 1135 provides guidelines in determining when funds belong
to a plan for ERISA bonding purposes. It provides that "[w]here
the employer or employee organization establishing the plan is
itself the plan administrator: . . . Contributions made to a
plan by such employer or employee organization . . . become
"funds" . . . of the plan if and when . . . segregated."
29 C.F.R. § 2580.412-5(b)(2) (1991). Funds are segregated when
taken out of general assets, placed in separate accounts, paid
over to the trustee or identified on a separate set of books.
29 C.F.R. § 2580.412-5(b)(2). These guidelines similarly apply
when an insurance carrier serves as the medium for benefits.
29 C.F.R. § 2580.412-5(b)(2). This regulation was properly
promulgated and would seem to be a binding legislative rule. It
also seems consistent with the Statute in that a plan itself
shall specify the basis by which contributions are made to and
from the plan thereby constituting plan assets. 29 U.S.C. § 1102(b).
Northwestern, as the excess risk insurer, controls only its
own assets, not the assets constituting Plan funds. A mere
contractual relationship with the plan sponsor will not
transform an insurance company into an ERISA fiduciary unless
at some point that insurer exercises some control or authority
over the Plan, participants, or beneficiaries. If the
Subscription Agreement provided that Northwestern paid the
actual benefits as opposed to reimbursing the Plan for benefits
actually paid, this finding might be different. The contract
between Northwestern and Bromenn, however, did not establish
the Plan, affect benefits paid from the Plan, affect
eligibility, or touch any other cognizable duty owed to the
Plan, participants, or beneficiaries. Therefore, Northwestern
fails to satisfy the requisites of an ERISA fiduciary.
Based on the finding that neither Self Assurance nor
Northwestern are fiduciaries, the Court finds no basis
supporting a civil action under section 1132(a)(2) for Bromenn.
Furthermore, Bromenn's claims do not allege an action under
section 1132(a)(3). Section 1132(a)(3) empowers Bromenn to
enjoin any act or practice which violates ERISA or the terms of
the Plan. This enforcement provision is simply not applicable
to the damages sought by Bromenn in this case.
FEDERAL QUESTION JURISDICTION
When a claim does not come within ERISA's grant of federal
jurisdiction, 29 U.S.C. § 1132, the claim may fall within the
general federal question jurisdictional statute, 28 U.S.C. § 1331.
See generally Winstead v. J.C. Penney Co., Inc.,
933 F.2d 576 (7th Cir. 1991) and Dugan v. Nickla, 763 F. Supp. 981
(N.D.Ill. 1991). Federal question jurisdiction requires that
the case arise "under the Constitution, laws, or treaties of
the United States." 28 U.S.C. § 1331. A cause of action arises
under the laws of the United State only when a plaintiff's
well-pleaded complaint raises a federal issue on its face.
Franchise Tax Bd. v. Construction Laborers Vacation Trust,
463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). In a case where
preemption is raised as a defense to the plaintiff's claim, the
requisite federal issue does not appear on the face of the
plaintiff's complaint for removal purposes. A preemption
therefore, cannot establish the original federal jurisdiction
necessary for removal to federal court. Metropolitan Life Ins.
Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95
L.Ed.2d 55 (1987); Lister v. Stark, 890 F.2d 941, 943 (7th Cir.
1989). The Supreme Court, however, recognizes an exception to
the "well-pleaded complaint" rule where Congress has
"completely preempted" a given area of state law. Metropolitan
Life, 481 U.S. at 63, 107 S.Ct. at 1546. The doctrine of
complete preemption enables the Court to recharacterize a
plaintiff's state law claim into a federal claim making removal
appropriate. Lister, 890 F.2d at 943. Whether a claim has been
completely preempted is a determination of congressional
intent. Metropolitan Life, 481 U.S. at 66, 107 S.Ct. at
1547-1548; Lister, 890 F.2d at 943.
The doctrine of complete preemption is a federal
jurisdictional doctrine, not a substantive preemptive doctrine.
See Lister, 890 F.2d at 943 n. 1. If the jurisdictional basis
for removal is founded on a preemption defense and complete
preemption cannot be established, the case must be remanded to
state court. Lister, 890 F.2d at 943 n. 1, n. 5. As noted in
Lister, the decision to remand under such circumstances will
not preclude the state court from applying federal law to
substantively preempted state law claims in resolving the
dispute. Lister, 890 F.2d at 943 n. 1.
The Supreme Court and the Seventh Circuit hold that Congress
intended "to make all suits that are cognizable under ERISA's
civil enforcement provisions federal question suits."
Lister, 890 F.2d at 943-944; Metropolitan Life, 481 U.S. at 66,
107 S.Ct. at 1547-48. This requires an analysis of 29 U.S.C. § 1132(a)
to determine whether the facts pled by the plaintiff
state a cause of action under ERISA's civil remedy provisions.
Metropolitan Life, 481 U.S. at 63-64, 107 S.Ct. at 1546-47.
Therefore, a federal court has subject matter jurisdiction over
any state law claim cognizable under 29 U.S.C. § 1132(a)
pursuant to the doctrine of complete preemption. Beyond this
limitation, the Seventh Circuit fails to acknowledge removal
jurisdiction for ERISA actions removed under the general
federal question jurisdiction.
Bromenn's state law claims are not completely preempted for
jurisdictional purposes unless they fall within the scope of
ERISA's inclusive civil enforcement provisions. Cf. Franchise
Tax and Allstate Ins. Co. v. 65 Secur. Plan, 879 F.2d 90 (3rd
Cir. 1989) with Metropolitan Life, Pilot Life, and Lister.
Based on the September 11, 1992, finding that Self Assurance
was a fiduciary, this Court held that Bromenn pled a cognizable
claim under ERISA's civil enforcement provisions, thereby
conferring subject matter jurisdiction under 28 U.S.C. § 1331.
Because the Court is now convinced that fiduciary status does
not exist for either Defendant, the Court reconsiders and
withdraws its earlier holding.
The Defendants argue that a determination of subject matter
jurisdiction does not require a finding of fiduciary status.
While this may be true in cases involving actions brought by
the Secretary, participants, or beneficiaries, or in cases
seeking equitable relief, the only cognizable ERISA civil
remedy available in this case based on the juxtaposition of the
parties involved, the claims alleged, and the relief sought
falls under section 1132(a)(2), breach of fiduciary duty. ERISA
enforcement provision 1132(a)(2) necessarily requires the
defendant be an ERISA fiduciary. 29 U.S.C. § 1132(a)(2) and
Furthermore, the cases cited by the Defendants which involve
subject matter jurisdiction in the removal context are not
inconsistent with this Court's holding. Metropolitan Life
(Former employee's state law claim displaced by section
1132(a)(1)(B) therefore satisfies the "arises under" language
of 28 U.S.C. § 1331); Pilot Life (held employee's common law
breach of contract and tort claims fell under ERISA's civil
enforcement scheme); Pohl v. National Benefits Consultants,
Inc., 956 F.2d 126, 128 (7th Cir. 1992) (Court recharacterized
the employee/participant's state claim as a claim for ERISA
benefits); and Lister (removal jurisdiction proper because
participant's state claims are cognizable under ERISA's civil
As stated in the prologue to this discussion, the primary
purpose of ERISA is to protect the interests of participants
and beneficiaries of employee benefit plans through established
standards and available remedies. Therefore, ERISA's inclusive
civil enforcement provisions understandably provide a broader
range of cognizable claims for participants and beneficiaries
than for fiduciaries. Had Bromenn been a participant or
beneficiary seeking benefits or had either of the Defendants
been a fiduciary the results of this Motion would have been
different. Moreover, if this cause was brought originally in
federal court, as opposed to removed, the Court may have had
subject matter jurisdiction under 28 U.S.C. § 1331 for a
federal common law claim. See e.g., Winstead v. J.C. Penney
Co., Inc., 933 F.2d 576 (7th Cir. 1991) and Dugan v. Nickla,
763 F. Supp. 981 (N.D.Ill. 1991). For removal purposes, however,
the doctrine of complete preemption must be established by the
parties seeking removal.
For the reasons stated above, the Court lacks subject matter
jurisdiction over these claims and Bromenn's Motion to Remand
is GRANTED. The Motions to Dismiss and Strike are DENIED as
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