### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT APRIL 14, 2003 THOMAS K. KAHN CLERK

* Honorable Jerome Farris, United States Circuit Judge for the Ninth Circuit, sitting by designation. [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH

CIRCUIT

___________________________

No. 02-14740

___________________________ D.C. Docket No. 01-08027-CV-ZLOCH ROBERT STERN, Plaintiff-Appel lant,

versus INTERNATIONAL BUS INESS MACHINES, (IBM), a New Y ork corporation, Defendant-Appellee.

___________________________ Appeal from t

he United States D

istrict Court for t

he Southern District of Florida

___________________________ (April 14, 2003) Before HULL, MARCUS and FARRIS * , Circuit Judges. FARRIS, Circuit Judge:2

Plaint iff Rob ert Ster n, supp orted b y amicus curiae the Secretary of Labor, contends that this m

atter was im

properly rem

oved to federal cour

t because his employer’ s sickness/accident program is exe mpted by re

gulation from be

ing

cons idere d a “wel fare b enefi ts pl an” un der th e Emplo yee Ret iremen t Inco me Security Act of 1974, 29 U.S.C. § 1001-1461. We agree. We vacate the summary judgment order

, reverse the ord

er denying Ster

n’s motion to re

mand, and rem

and with an instruction to

return this case to t

he state court. I In 1999, Robert Stern, an IBM employee, injured his hand, which rendere d him unable to work. IBM has a “Sickness and Accident Incom e Plan,” which provides up to 52 weeks

of an employ

ee’s “regu

lar salary” w

hen he is unable to work due to sickness or

an accident. The

IBM Program

defines “unable

to work” as “unable to pe

rform the dutie s of the job you he ld at the time of

your sickness or accident, or the d

uties of any other

job that IBM deter

mines that y

our are capable of performing.” IBM makes paym ents to employees who qualify for the program out of the compan

y’s general

assets. After IBM discont

inued paying him

Program benefits, Stern sued in state court for breach o f his employ ment agreem

ent. IBM rem

oved the case to the3

federal district court, contending that the IBM Program is an ERISA “w elfare benefit plan.” IBM argued that because the Program constitutes an ERISA welfare benefits plan, the A

ct preempts St

ern’s state law

action. IBM then m

oved to dismiss the complaint for fai lure to state a claim under ERI SA. The district court

denied Stern’s m

otion to remand.Without discussing whether the Progr

am constitutes a

“payroll pr

actice” specifically exemp ted from ERISA by 29 C.F.R. § 2510.3-1(b)(2), the court found the IBM Program to be an ERISA plan. I

t granted IBM’s m

otion to dismiss the

state complain

t and gave Stern leave to file

an amended com

plaint asserting cla

ims under ERI SA. The court later found that IBM had not violated ERISA and granted summary judgment in fa

vor of IBM. Ster

n appeals the court’ s denial of his mo tion to remand an d is sup ported by amicus curiae the Secretary of Labor. We review de

novo the orders deny

ing Stern’s m

otion to remand to

state court and gra

nting IBM’s motion for summary judgment. See Henson v. Ciba-G eigy Corp. , 261 F.3d 1065, 1068 (11th Cir. 2001) (removal jurisdiction); Waddell v. Vall ey Forge Dental Assoc., Inc. , 276 F.3d 1275, 1279 (11th Cir. 2001) (summary judgm ent). II ERISA regulates “employe e welfare benefit plans,” which include plans that provide employ

ees “benefits

in the event of sickne ss, accident, [o r] disability .” 294

U.S.C. § 1002(1 ). ERISA also broadly preem

pts state laws rela

ting to any employee benefit plan. 29 U.S.C. § 1144(a). H owever, the Secretary of Labor has promulgated a r

egulation that exclude s certain “pay roll practices” f

rom the application of ERISA. That regulation provides that an “employee benef it welfare plan” shall not include: Payment of

an employee’s normal c

ompensation, out

of the employer’s general assets, on account of periods of time during which the employee is physically or m entally unable to perform his or her duties, or is otherwi se absent for medical reason s . . . . 29 C.F.R. § 2510. 3-1(b)(2). The sole legal question pr

esented here—one no

t considered by the district court—is whether IBM’s Program is a pay roll practice that is exempted from ERISA’s coverage

. Under 28 U.S.C . § 1441(a), subj ect to certain exceptions that are not applicable here, “any civil action brought in a State court of which the district courts of the Unite

d States have origina

l jurisdiction[] may be re

moved by the defendant” to fede

ral court. In “

federal question” cases such as the one a t bar, the “well-plead

ed complaint rul

e” holds that a fede

ral defense to a sta

te law claim generally is ins

ufficient to satisf

y the requirem

ents of 28 U.S.C . § 1331. Instead, the federal questi

on must “necessarily appea r[] in the plainti

ff’s statem

ent of his own claim in the

bill or declaration

, unaided by any

thing alleged in antic

ipation of5

avoidance of defenses which it is thought the defendant may interpose.” Oklahoma Tax Com

m’n v. Graham , 489 U.S. 838, 841 (1989); see also Caterpillar Inc. v. Willi ams , 482 U.S. 386, 392 (1987); Taylor v

. Anderson , 234 U.S. 74, 75-76 ( 1914); Louisville & N.R. Co. v. M ottley , 211 U.S. 149, 152-54 (1908). As we ha

ve said in Whitt v. Sherma n Int’l Corp. , “a case doe s not arise under federal law

unless a federal qu

estion is presented on the face of the plaintiff’s com

plaint.” 147 F.3d 13 25, 1329 (11th Cir. 19 98) (citing Kemp v. Int’l Bus. Machs. Corp

. , 109F.3d 708, 712 (11th Cir. 1997)). As binding as the “well-pleaded complaint rule” is, however, it perm its an extremely narrow exception i

n cases implica

ting the doctrine of complete preemption. A

s we recently

explained in Geddes v. Am. Airlines, Inc. : Preemption is the power of federal law to displace state law substantively. The federal preemptive power ma y be complete, providing a basis for j urisdiction in the fed eral courts, or it

may be what has been calle

d “ordinary

preemption,”

providing a substantive defense to a state law action on the basis of federal law. More specifically,

ordinary pree

mption may

be invoked in both state and federal court as a

n affirmative

defense to the alle

gations in a plain tiff’ s compl aint. Such a defen se ass erts t hat th e stat e clai ms have been substantive

ly displaced by

federal law. Complete preemption, on the other hand, is a doctrine distinct from ordinary preemption. R

ather than constituti

ng a defense, it is a

narrowly drawn jurisdicti

onal rule for asses sing federal rem oval jurisdiction when a complai

nt purports to raise on

ly state law c

laims. It looks beyond t he compl aint to determin e if the suit is , in real ity, pur ely a creature of fede

ral law, even if

state law would pr

ovide a cause of6

action in the absence of the federal law, thus creating the federal question jurisdictio

n requisite to rem

oval to federal cour

ts. 321 F.3d 1349, 1352-53 ( 11th Cir. 2003) (inte rnal punctuation and c

itations omitted); see also Behlen v. Merrill Lynch , 311 F.3d 1087, 1090 ( 11th Cir. 2002) (“Once an ar

ea of state law ha

s been complete

ly pre-em pted, any clai

m purportedly based on that pre-empted state law is considered, from its incep tion, a federal claim

, and therefore a

rises under feder

al law.”); Butero v. Royal Maccabees Life I

ns. Co. , 174 F.3d 1207, 1211- 12 (11th Cir. 1999) ( describing the doctrine of “complete” or “ super preempti

on”); Whitt , 147 F.3d at 1329-30 (same). Although the doctrine of complete preemption is extremely lim ited, and has been found by the S

upreme Court t

o exist in only two

substantive contexts,

one of these is section 50 2 of ERISA, 29 U.S.C. § 1132(a). See Metropolitan Lif e Ins. Co. v. Taylor

, 481 U.S. 58, 6 7 (1987) (“[T ]his [ERISA]suit, though it purport s to raise only state

law claims,

is necessarily

federal in chara

cter by virtue o f the clearly m anifested intent of Congress.”); Anderson v. H & R Block, Inc. , 287 F.3d 1038, 1042 (11th Cir. 2002). Accordingl y, if Stern “

is seeking relief th

at is available under 29 U .S.C. § 1132(a) ,” then the distric t court was corre

ct to “recharacterize [his] claim a s an ERISA claim, and removal j urisdiction exist[ed].” Whitt , 147 F.3d at 1330. “ Conversely, if

[Stern] is not se

eking relief that is7

available under sec

tion 1132(a), no fed

eral question juri sdiction exist[ed] and the district court erred by asserting jurisdicti on over this action

. Id. The IBM Program

fits within the expr

ess terms of the

Secretary’ s payroll practices regulation. It pays out of IBM’s general assets an employ ee’s normal compensation dur

ing periods when the e

mployee is p

hysically or

mentally un

able to work. The Sec

retary is spec

ifically author

ized to define ERI SA’s “acc ounting, technical and trade terms,” 29 U.S.C. § 1135, and her reasonable views are given deference by the courts. See Chevron U.S.A., Inc. v. Natural Res. Def . Council, Inc. , 467 U.S. 837, 843 (1984). The Se cretary conte

nds that the IBM Prog

ram is covered by the pa

yroll practice s regulation, a view consistent with num

erous advisory opinions on sick leave and disability plans analogous to the IBM Program. See Department of Labor Advisory Opinion 93-27A (Oct. 12, 1993); Department o f Labor Advisory Opinion 93-20A (July

16, 1993); Departm

ent of Labor Advisory Opinion 93-02A (Jan. 12, 1993); Department of Labor Advisory Opinion 92-18A (Se

pt. 30, 1992). Alt

hough such opinion letter s are not binding, the views of the agency entrusted with interpreting and enforcing ERISA carry considerable weigh t. See Williams v. W right , 927 F.2d 1540, 1545 (11th Cir. 1991). Put bluntly

, for IBM to preva

il, it must show

the Secretary ’s application of1 IBM challenges the Secretary’s interpretation of the payroll practices regulation but not

the Secretary

’s authority

to promulgate it. 8 the payroll practices regulation to the Program to be unreasonable. 1 See, e.g. , Massachusetts v. M

orash , 490 U.S. 107, 120-21 (1989) (“ It is sufficient for

this case that the Secretary’s determination that a single em ployer’s administration of a vacation pay policy from its general assets does not possess the characteristics of a welfare benefi

t plan constitutes a r

easonable construct

ion of the statute.”

) This IBM cannot do. The Supreme Court has discu ssed the primary purpose of ERISA: In enacting ERIS

A, Congress’ pr

imary concern was with the mismanage

ment of funds accumulated to fi nance employ

ee benefits and the failure to pay employees be nefits from accumulated funds

. To that end, it esta

blished extensive re

porting, disclosure,

and fiduciary req

uirements to insu

re against the possibi

lity that the employee’ s expectation of the b enefit would be def eated through poor manageme

nt by the plan adm

inistrator. Beca

use ordinary vacation payments a

re typically

fixed, due at known

times, and do not

depend on contingencies outside

the employe

e’s control, the

y present none of the risks that ERIS

A is intended to addre ss. If there is a danger of defeated expectations, it is no different from the danger of defeated expectations of wa

ges for services pe

rformed—a da

nger Congress chose not to regul ate in ERISA. Morash , 490 U.S. at 115 (internal citation omitted). Every decision to interpret the payroll practices regulation since Morash supports the applicat ion of § 2510.3- 1(b) to IBM’s Pr

ogram. In Alaska Airlines, Inc. v. Oregon B ureau of Labor , 1229

F.3d 812, 815 (9th Cir

. 1997), the Ninth C

ircuit held that an e

mployer’ s payment of sick leave to its e

mployees,

out of the general a

ssets of the corpora

tion, constituted an exem

pted “payr

oll practice” rat

her than an employee welfar e benefit plan covered by ERISA. See also Funkhous er v. Wells Fargo Bank, N.A. , 289 F.3d 1137, 1142 (9th Cir. 2002) (finding si ck and vacation polici

es paid from general assets to be

payroll practi

ces). In McMahon v. Digit al Equip. Corp. , 162 F.3d 28 (1998), the First Circuit determined that a program that paid an employee’ s salary while

he was disabled wa

s an ERISA plan,

but only because i

t was partially funded from sour ces outside of the emplo yer’s general assets. “Where an employer pays occasional, temporary

benefits from

its general assets, there is no benefits fund to abuse or m ismanage and no s

pecial risk of loss or nonpayment of benefits.” Id. at 36. In Capriccioso v. He nry Ford Health Sys. , No. 99-1369, 2000 W

L 1033030, at *2 (6th C

ir. July 17, 2000

) (unpublished), the Sixth Circuit found that a program that paid full salary to disabled employees was a payroll practice because the salary was paid out of t he employer’s general assets. See also Shea v. W

ells Fargo Armored

Serv. Corp. , 810 F.2d 372, 376 (2d Cir. 1987) (holding, in pre- Morash case, “that from the paym ent of traditional sick leave and vacation w

ages out of an em

ployer’s gene

ral operating asset

s, there do not arise the evils Congress intended to address”) (internal quotation omitted).10

The district court

found ERISA cove

rage by rely

ing on a cursory c

itation to Donovan v. Dilling

ham , 688 F.2d 1367 (11th C ir. 1982) (en banc) , but that case does not support IBM’ s position in light of the c lear applicability

of the payroll practices regulat

ion. In Donovan , this court prescr ibed general guideli

nes for resolving the threshol

d question about the exis tence of an ERIS

A plan: “[A]‘plan, fund, or program ’ under ERISA is established if fr

om the surrounding circumstance s a reasonable per son can ascertain th

e intended benefits,

a class of beneficiaries, the source of financing, and procedures for receiving benefits.” Id. at 1373. Donovan provides a useful fr amework for

examining, in l

ight of all circumstances, whether an ERISA p lan exists when that question is in do ubt. However, neither Donovan nor its progeny address the issue here, when a program would clearly

qualify as an E

RISA plan but for

its spe cific ex emption by a reasonably justified reg ulation. For this reason, I

BM’s reliance on Whitt v. Sherma n Int’l Corp. , 147 F.3d 1325 (11th Cir. 1998),

and Williams , 927 F.2d at 11544-45, is unavailing. IBM argues tha t these cas es noted t hat “payment of be nefits ou t of an employer ’s general assets does not affect the threshold question of ERISA coverage.” Whitt , 147 F.3d at 1330. Howev er, Whitt focused on the point at which beneficiaries could have determ

ined their rights, no

t on the source of fund

ing or an explicit11

regulatory exclusion. Similarly, although the Williams court found that an employer cannot circumvent ERISA by paying from its general assets that which the statute requires be paid from a separate trust , Williams , 927 F.2d at 1544, t he court did not conclude that the payment of benefits from general assets is never relevant to the quest

ion of whether an E

RISA plan exists,

and did not discuss the payroll practi

ces exemption. IBM argues that the Pro gram provides more than “traditio nal sick leave,” but fails to offer a

persuasive reason f

or why the Prog

ram’s term

s do not fit comfortably within the payroll p ractices regulation . According to IBM, Morash stands for the proposit

ion that ERISA co

verage would exist f

or otherwise exempted prac

tices where “

either the emp

loyee’s right

to a benefit is contin

gent upon some future

occurrence or the

employee b ears a risk diffe rent from his ordinary employment risk.” Morash , 490 U.S. at 116 . First, this conf lates rule and exception. The

question is whether t

he exception applies,

not whether there

is an exception to th e exception that wou ld allow the general ru le to apply again. Second, as the Se

cretary of L

abor notes, IBM’ s definition of “ contingency” w

ould mean that the in

clusion of “sick leave” in the pay roll practices re

gulation is essential ly meaningles s. All sick l eave polic ies are “conti ngent” on an employee’s inability to work for so me medical reason. See Shea , 810 F.2d at 376 (holding that12

sick leave policy

was a payroll practice in part be cause the empl

oyer paid the leave “without

additional conditions or

contingencies of any

kind”). In Morash , the Court was not m

aking a broad statem

ent about what consti

tute “contingencies”; it was contrasti ng severance pay

ments (continge

nt upon termination, and not

explicitly cove

red by the pay

roll practices re

gulation) with vacation pay ben

efits ( not contingent upon a future event, and explicitly covered by the regulation). See Morash , 490 U.S. at 115 -16. For the first tim

e on appeal, IBM a

sserts that it annual

ly files Form

5500 with the Department of Labor and the IRS identifying the Program as an ERISA plan. IBM offer

s no supporting docum

entation and the plaint

iff strongly con

tests this assertion. Th

e way in which

an employe

r characterize s its plan may be one factor, among others, in det ermining ERISA coverage. See, e.g. , Whitt , 147 F.3d at 1331 (“[A]lthough not dispositive of the issue, we note that [the employer] never made an ERISA filing w ith the federal gove

rnment . . .until after [the employee] was fired.”).Nevertheless, even if IBM has treated the Program as an ERISA plan with respect to government filings, its mere labeling of the plan should not determine wh ether ERISA applies. See McMahon , 162 F.3d at 38. Allowing this could lead to a form of “regulation shopping.” Id. Where, as here, an employer

pays an emp

loyee’s norm

al compensation

for periods of m

ental or13

physical disability entirely from its general assets, the program constitutes an exempted pay

roll practice under

29 C.F.R. § 2510. 3-1(b) and not an ER ISA plan. A defendant may remove a case to federal court only if the district court would have had jurisdiction over the case had the case been brought there originally. 28 U .S.C. § 1441. B ecause the IBM Pr ogram is exem

pted by regulation from

ERISA, the doc

trine of comple

te preemption i s inapplicable and no federal question jurisdiction exist s, see Kemp v. Int’ l Bus. Machs. Cor

p. , 109 F.3d 708, 712 (11th Cir. 1997), and removal to federal court was improper. III We VACATE

the order granting su

mmary judgment to the

defendant, REVERSE the order denying plaintiff’s motion to rem and, and REMAND with an instruction to return

this case to the state

court.